1.1 A bill for an act
1.2 relating to financing and operation of state and local
1.3 government; making policy, technical, administrative,
1.4 enforcement, collection, refund, and other changes to
1.5 income, franchise, property, sales and use, estate,
1.6 vehicle registration, health care provider, cigarette
1.7 and tobacco products, insurance premiums, aggregate
1.8 removal, petroleum, gambling, mortgage registry,
1.9 occupation, net proceeds, and production taxes, and
1.10 other taxes and tax-related provisions; changing
1.11 provisions relating to fiscal disparities,
1.12 tax-forfeited lands, state debt collection procedures,
1.13 sustainable forest incentives programs, and tax data
1.14 provisions; conforming provisions to certain changes
1.15 in federal law; changing powers and duties of certain
1.16 local governments and state departments or agencies;
1.17 changing tax increment financing provisions;
1.18 authorizing establishment of an International Economic
1.19 Development Zone and providing for tax incentives;
1.20 imposing a franchise fee for operation of card clubs;
1.21 regulating tax preparers; imposing requirement on
1.22 vendors that contract with state to collect sales
1.23 taxes; changing provisions relating to certificates of
1.24 title of vehicles held by motor vehicle dealers;
1.25 changing or providing for studies and reports;
1.26 providing for task force on electronic filing and
1.27 recording of real estate documents; changing and
1.28 providing penalties; providing for allocation and
1.29 transfers of funds; clarifying appropriations;
1.30 appropriating money; amending Minnesota Statutes 2002,
1.31 sections 16C.03, by adding a subdivision; 16D.10;
1.32 97A.061, subdivision 1; 144F.01, subdivision 10;
1.33 168A.02, subdivision 2; 168A.11, subdivisions 1, 2, by
1.34 adding a subdivision; 240.30, by adding a subdivision;
1.35 270.02, subdivision 3; 270.65; 270.69, subdivision 4;
1.36 270B.01, subdivision 8; 270B.12, subdivision 9;
1.37 272.01, subdivision 2; 272.02, subdivisions 1a, 7, 22,
1.38 by adding subdivisions; 272.0212, subdivisions 1, 2;
1.39 272.029, subdivisions 4, 6; 273.11, by adding a
1.40 subdivision; 273.111, subdivision 6; 273.124,
1.41 subdivision 8, by adding a subdivision; 273.1384,
1.42 subdivision 1; 273.19, subdivision 1a; 274.14;
1.43 275.065, subdivision 1a; 275.07, subdivisions 1, 4;
1.44 276.04, subdivision 2; 282.016; 282.21; 282.224;
1.45 282.301; 287.04; 289A.08, subdivision 1; 289A.12,
1.46 subdivision 3; 289A.31, subdivision 2; 289A.37,
2.1 subdivision 5; 289A.38, subdivision 6; 289A.56, by
2.2 adding a subdivision; 289A.60, subdivision 6; 290.06,
2.3 subdivision 22, by adding a subdivision; 290.0674,
2.4 subdivision 2; 290.091, subdivision 3; 290.17, by
2.5 adding a subdivision; 290.191, subdivisions 2, 3, 5,
2.6 6, 10, 11, by adding a subdivision; 290.92,
2.7 subdivisions 1, 4b; 290.9705, subdivision 1; 290A.03,
2.8 subdivision 13; 290A.07, by adding a subdivision;
2.9 290C.05; 295.50, subdivision 4; 295.582; 296A.22, by
2.10 adding a subdivision; 297A.61, subdivision 4, by
2.11 adding subdivisions; 297A.62, by adding a subdivision;
2.12 297A.67, by adding a subdivision; 297A.68, by adding
2.13 subdivisions; 297A.70, by adding a subdivision;
2.14 297A.71, by adding a subdivision; 297A.87,
2.15 subdivisions 2, 3; 297A.995, subdivision 6; 297E.01,
2.16 subdivisions 5, 7, by adding subdivisions; 297E.07;
2.17 297F.01, by adding a subdivision; 297F.09, by adding a
2.18 subdivision; 297I.01, by adding subdivisions; 297I.05,
2.19 subdivisions 4, 5, by adding a subdivision; 298.01,
2.20 subdivisions 3, 4; 298.24, subdivision 1; 325D.33,
2.21 subdivision 6; 365.43, subdivision 1; 365.431;
2.22 469.1734, subdivision 6; 469.174, subdivision 11;
2.23 469.175, subdivision 4a; 469.176, subdivision 4d;
2.24 469.1761, subdivisions 1, 3; 469.1771, subdivision 5;
2.25 469.178, subdivision 1; 469.1831, subdivision 6;
2.26 473.843, subdivision 5; 473F.02, subdivisions 2, 7;
2.27 477A.11, subdivision 4, by adding a subdivision;
2.28 477A.12, subdivisions 1, 2; 477A.14, subdivision 1;
2.29 Minnesota Statutes 2003 Supplement, sections 4A.02;
2.30 16A.152, subdivision 2; 116J.556; 168A.05, subdivision
2.31 1a; 270.06; 270.30, subdivisions 1, 5, 8; 270B.12,
2.32 subdivision 13; 272.02, subdivisions 47, 56, 65;
2.33 273.11, subdivision 1a; 273.13, subdivisions 22, 23;
2.34 274.014, subdivision 3; 275.065, subdivision 3;
2.35 276.112; 289A.02, subdivision 7; 289A.08, subdivision
2.36 16; 289A.19, subdivision 4; 289A.40, subdivision 2;
2.37 290.01, subdivisions 7, 19, 19a, 19b, 19c, 19d, 31;
2.38 290.06, subdivision 2c; 290.0674, subdivision 1;
2.39 290.091, subdivision 2; 290.0921, subdivision 3;
2.40 290A.03, subdivision 15; 290C.10; 291.005, subdivision
2.41 1; 291.03, subdivision 1; 297A.668, subdivisions 1, 3,
2.42 5; 297A.669, subdivision 16; 297A.68, subdivisions 2,
2.43 5, 39; 297A.70, subdivision 8; 297F.08, subdivision
2.44 12; 297F.09, subdivisions 1, 2; 298.75, subdivision 1;
2.45 469.174, subdivision 25; 469.177, subdivision 1;
2.46 469.310, subdivision 11; 469.330, subdivision 11;
2.47 469.335; 469.337; 477A.011, subdivision 36; 477A.03,
2.48 subdivision 2b; Laws 1990, chapter 604, article 7,
2.49 section 29, subdivision 1, as amended; Laws 1998,
2.50 chapter 389, article 3, section 41; Laws 1998, chapter
2.51 389, article 3, section 42, subdivision 2, as amended;
2.52 Laws 1998, chapter 389, article 8, section 43,
2.53 subdivision 3; Laws 1998, chapter 389, article 11,
2.54 section 24, subdivisions 1, 2; Laws 2000, chapter 391,
2.55 section 1, subdivisions 1, 2, as amended; Laws 2001,
2.56 First Special Session chapter 10, article 2, section
2.57 77, as amended; Laws 2002, chapter 365, section 9;
2.58 Laws 2002, chapter 377, article 3, section 4; Laws
2.59 2003, First Special Session chapter 1, article 2,
2.60 section 123; Laws 2003, First Special Session chapter
2.61 21, article 5, section 13; Laws 2003, First Special
2.62 Session chapter 21, article 6, section 9; proposing
2.63 coding for new law in Minnesota Statutes, chapters
2.64 270; 272; 273; 290; 290C; 297F; 325F; 469; 473;
2.65 repealing Minnesota Statutes 2002, sections 273.19,
2.66 subdivision 5; 274.05; 275.15; 283.07; 297E.12,
2.67 subdivision 10; 469.176, subdivision 1a; 469.1766;
2.68 Laws 1975, chapter 287, section 5; Laws 2003, chapter
2.69 127, article 9, section 9, subdivision 4; Minnesota
2.70 Rules, parts 8093.2000; 8093.3000; 8130.0110, subpart
2.71 4; 8130.0200, subparts 5, 6; 8130.0400, subpart 9;
3.1 8130.1200, subparts 5, 6; 8130.2900; 8130.3100,
3.2 subpart 1; 8130.4000, subparts 1, 2; 8130.4200,
3.3 subpart 1; 8130.4400, subpart 3; 8130.5200; 8130.5600,
3.4 subpart 3; 8130.5800, subpart 5; 8130.7300, subpart 5;
3.5 8130.8800, subpart 4.
3.6 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
3.7 ARTICLE 1
3.8 INCOME, FRANCHISE, AND OCCUPATION TAXES
3.9 Section 1. Minnesota Statutes 2002, section 289A.08,
3.10 subdivision 1, is amended to read:
3.11 Subdivision 1. [GENERALLY; INDIVIDUALS.] (a) A taxpayer
3.12 must file a return for each taxable year the taxpayer is
3.13 required to file a return under section 6012 of the Internal
3.14 Revenue Code, except that:
3.15 (1) an individual who is not a Minnesota resident for any
3.16 part of the year is not required to file a Minnesota income tax
3.17 return if the individual's gross income derived from Minnesota
3.18 sources as determined under sections 290.081, paragraph (a), and
3.19 290.17, is less than the filing requirements for a single
3.20 individual who is a full year resident of Minnesota; and
3.21 (2) an individual who is a Minnesota resident is not
3.22 required to file a Minnesota income tax return if the
3.23 individual's gross income derived from Minnesota sources as
3.24 determined under section 290.17, less the amount of the
3.25 individual's gross income that consists of compensation paid to
3.26 members of the armed forces of the United States or United
3.27 Nations for active duty performed outside Minnesota, is less
3.28 than the filing requirements for a single individual who is a
3.29 full-year resident of Minnesota.
3.30 (b) The decedent's final income tax return, and other
3.31 income tax returns for prior years where the decedent had gross
3.32 income in excess of the minimum amount at which an individual is
3.33 required to file and did not file, must be filed by the
3.34 decedent's personal representative, if any. If there is no
3.35 personal representative, the return or returns must be filed by
3.36 the transferees, as defined in section 289A.38, subdivision 13,
3.37 who receive property of the decedent.
3.38 (c) The term "gross income," as it is used in this section,
4.1 has the same meaning given it in section 290.01, subdivision 20.
4.2 [EFFECTIVE DATE.] This section is effective for taxable
4.3 years beginning after December 31,2003.
4.4 Sec. 2. Minnesota Statutes 2003 Supplement, section
4.5 289A.08, subdivision 16, is amended to read:
4.6 Subd. 16. [TAX REFUND OR RETURN PREPARERS; ELECTRONIC
4.7 FILING; PAPER FILING FEE IMPOSED.] (a) A "tax refund or return
4.8 preparer," as defined in section 289A.60, subdivision 13,
4.9 paragraph (g), who prepared more than 500 100 Minnesota
4.10 individual income tax returns for the prior calendar year must
4.11 file all Minnesota individual income tax returns prepared for
4.12 the current calendar year by electronic means. "Tax refund or
4.13 return preparer" does not include (i) an organization that meets
4.14 the requirements of section 501(c)(3) of the Internal Revenue
4.15 Code or (ii) an individual hired by such an organization for the
4.16 purpose of preparing tax returns.
4.17 (b) For tax returns prepared for the tax year beginning in
4.18 2001, the "500" in paragraph (a) is reduced to 250.
4.19 (c) For tax returns prepared for tax years beginning after
4.20 December 31, 2001, the "500" in paragraph (a) is reduced to 100.
4.21 (d) Paragraph (a) does not apply to a return if the
4.22 taxpayer has indicated on the return that the taxpayer did not
4.23 want the return filed by electronic means.
4.24 (e) (c) For each return that is not filed electronically by
4.25 a tax refund or return preparer under this subdivision,
4.26 including returns filed under paragraph (d) (b), a paper filing
4.27 fee of $5 is imposed upon the preparer. The fee is collected
4.28 from the preparer in the same manner as income tax. The fee
4.29 does not apply to returns that the commissioner requires to be
4.30 filed in paper form.
4.31 [EFFECTIVE DATE.] This section is effective for returns
4.32 filed for tax years beginning after December 31, 2003.
4.33 Sec. 3. Minnesota Statutes 2003 Supplement, section
4.34 290.01, subdivision 7, is amended to read:
4.35 Subd. 7. [RESIDENT.] (a) The term "resident" means any
4.36 individual domiciled in Minnesota, except that an individual is
5.1 not a "resident" for the period of time that the individual is
5.2 either:
5.3 (1) on active duty stationed outside of Minnesota while in
5.4 the armed forces of the United States or the United Nations; or
5.5 (2) a "qualified individual" as defined in section
5.6 911(d)(1) of the Internal Revenue Code, if the qualified
5.7 individual notifies the county within three months of moving out
5.8 of the country that homestead status be revoked for the
5.9 Minnesota residence of the qualified individual, and the
5.10 property is not classified as a homestead while the individual
5.11 remains a qualified individual.
5.12 (b) "Resident" also means any individual domiciled outside
5.13 the state who maintains a place of abode in the state and spends
5.14 in the aggregate more than one-half of the tax year in
5.15 Minnesota, unless:
5.16 (1) the individual or the spouse of the individual is in
5.17 the armed forces of the United States; or
5.18 (2) the individual is covered under the reciprocity
5.19 provisions in section 290.081.
5.20 For purposes of this subdivision, presence within the state
5.21 for any part of a calendar day constitutes a day spent in the
5.22 state. Individuals shall keep adequate records to substantiate
5.23 the days spent outside the state.
5.24 The term "abode" means a dwelling maintained by an
5.25 individual, whether or not owned by the individual and whether
5.26 or not occupied by the individual, and includes a dwelling place
5.27 owned or leased by the individual's spouse.
5.28 (c) Neither the commissioner nor any court shall consider
5.29 charitable contributions made by an individual within or without
5.30 the state in determining if the individual is domiciled in
5.31 Minnesota.
5.32 [EFFECTIVE DATE.] This section is effective for taxable
5.33 years beginning after December 31, 2003.
5.34 Sec. 4. Minnesota Statutes 2003 Supplement, section
5.35 290.01, subdivision 19b, is amended to read:
5.36 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For
6.1 individuals, estates, and trusts, there shall be subtracted from
6.2 federal taxable income:
6.3 (1) interest income on obligations of any authority,
6.4 commission, or instrumentality of the United States to the
6.5 extent includable in taxable income for federal income tax
6.6 purposes but exempt from state income tax under the laws of the
6.7 United States;
6.8 (2) if included in federal taxable income, the amount of
6.9 any overpayment of income tax to Minnesota or to any other
6.10 state, for any previous taxable year, whether the amount is
6.11 received as a refund or as a credit to another taxable year's
6.12 income tax liability;
6.13 (3) the amount paid to others, less the amount used to
6.14 claim the credit allowed under section 290.0674, not to exceed
6.15 $1,625 for each qualifying child in grades kindergarten to 6 and
6.16 $2,500 for each qualifying child in grades 7 to 12, for tuition,
6.17 textbooks, and transportation of each qualifying child in
6.18 attending an elementary or secondary school situated in
6.19 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
6.20 wherein a resident of this state may legally fulfill the state's
6.21 compulsory attendance laws, which is not operated for profit,
6.22 and which adheres to the provisions of the Civil Rights Act of
6.23 1964 and chapter 363A. For the purposes of this clause,
6.24 "tuition" includes fees or tuition as defined in section
6.25 290.0674, subdivision 1, clause (1). As used in this clause,
6.26 "textbooks" includes books and other instructional materials and
6.27 equipment purchased or leased for use in elementary and
6.28 secondary schools in teaching only those subjects legally and
6.29 commonly taught in public elementary and secondary schools in
6.30 this state. Equipment expenses qualifying for deduction
6.31 includes expenses as defined and limited in section 290.0674,
6.32 subdivision 1, clause (3). "Textbooks" does not include
6.33 instructional books and materials used in the teaching of
6.34 religious tenets, doctrines, or worship, the purpose of which is
6.35 to instill such tenets, doctrines, or worship, nor does it
6.36 include books or materials for, or transportation to,
7.1 extracurricular activities including sporting events, musical or
7.2 dramatic events, speech activities, driver's education, or
7.3 similar programs. For purposes of the subtraction provided by
7.4 this clause, "qualifying child" has the meaning given in section
7.5 32(c)(3) of the Internal Revenue Code;
7.6 (4) income as provided under section 290.0802;
7.7 (5) to the extent included in federal adjusted gross
7.8 income, income realized on disposition of property exempt from
7.9 tax under section 290.491;
7.10 (6) to the extent included in federal taxable income,
7.11 postservice benefits for youth community service under section
7.12 124D.42 for volunteer service under United States Code, title
7.13 42, sections 12601 to 12604;
7.14 (7) to the extent not deducted in determining federal
7.15 taxable income by an individual who does not itemize deductions
7.16 for federal income tax purposes for the taxable year, an amount
7.17 equal to 50 percent of the excess of charitable contributions
7.18 allowable as a deduction for the taxable year under section
7.19 170(a) of the Internal Revenue Code over $500;
7.20 (8) for taxable years beginning before January 1, 2008, the
7.21 amount of the federal small ethanol producer credit allowed
7.22 under section 40(a)(3) of the Internal Revenue Code which is
7.23 included in gross income under section 87 of the Internal
7.24 Revenue Code;
7.25 (9) for individuals who are allowed a federal foreign tax
7.26 credit for taxes that do not qualify for a credit under section
7.27 290.06, subdivision 22, an amount equal to the carryover of
7.28 subnational foreign taxes for the taxable year, but not to
7.29 exceed the total subnational foreign taxes reported in claiming
7.30 the foreign tax credit. For purposes of this clause, "federal
7.31 foreign tax credit" means the credit allowed under section 27 of
7.32 the Internal Revenue Code, and "carryover of subnational foreign
7.33 taxes" equals the carryover allowed under section 904(c) of the
7.34 Internal Revenue Code minus national level foreign taxes to the
7.35 extent they exceed the federal foreign tax credit;
7.36 (10) in each of the five tax years immediately following
8.1 the tax year in which an addition is required under subdivision
8.2 19a, clause (7), or subdivision 19c, clause (16), an amount
8.3 equal to one-fifth of the delayed depreciation. For purposes of
8.4 this clause, "delayed depreciation" means the amount of the
8.5 addition made by the taxpayer under subdivision 19a, clause (7),
8.6 or, in the case of a corporation that converts to an "S"
8.7 corporation, the addition made under subdivision 19c, clause
8.8 (16), minus the positive value of any net operating loss under
8.9 section 172 of the Internal Revenue Code generated for the tax
8.10 year of the addition. The resulting delayed depreciation cannot
8.11 be less than zero; and
8.12 (11) job opportunity building zone income as provided under
8.13 section 469.316.;
8.14 (12) the amount of compensation paid to members of the
8.15 Minnesota National Guard or other reserve components of the
8.16 United States military for active service performed in
8.17 Minnesota, excluding compensation for services performed under
8.18 the Active Guard Reserve (AGR) program. For purposes of this
8.19 clause, "active service" means (i) state active service as
8.20 defined in section 190.05, subdivision 5a, clause (1); (ii)
8.21 federally funded state active service as defined in section
8.22 190.05, subdivision 5b; or (iii) federal active service as
8.23 defined in section 190.05, subdivision 5c, but "active service"
8.24 excludes services performed exclusively for purposes of basic
8.25 combat training, advanced individual training, annual training,
8.26 and periodic inactive duty training; special training
8.27 periodically made available to reserve members; and service
8.28 performed in accordance with section 190.08, subdivision 3;
8.29 (13) the amount of compensation paid to members of the
8.30 armed forces of the United States or United Nations for active
8.31 duty performed outside Minnesota; and
8.32 (14) to the extent not deducted in computing federal
8.33 taxable income, an amount, not to exceed $10,000, equal to
8.34 qualified expenses related to a qualified donor's donation,
8.35 while living, of one or more of the qualified donor's organs to
8.36 another person for human organ transplantation. For purposes of
9.1 determining the extent to which expenses are deducted in
9.2 computing federal taxable income, travel and lodging expenses
9.3 related to an organ donation are considered deducted by an
9.4 individual in determining federal taxable income to the extent
9.5 they exceed 7.5 percent of federal adjusted gross income as
9.6 defined in section 62 of the Internal Revenue Code. For
9.7 purposes of this clause, "organ" means all or part of an
9.8 individual's liver, pancreas, kidney, intestine, lung, or bone
9.9 marrow; "human organ transplantation" means the medical
9.10 procedure by which transfer of a human organ is made from the
9.11 body of one person to the body of another person; "qualified
9.12 expenses" means unreimbursed expenses for both the individual
9.13 and the qualified donor for (i) travel, (ii) lodging, and (iii)
9.14 lost wages net of sick pay, except that such expenses may be
9.15 subtracted under this clause only once; and "qualified donor"
9.16 means the individual or the individual's dependent, as defined
9.17 in section 152 of the Internal Revenue Code. An individual may
9.18 claim the subtraction in this clause only once for each instance
9.19 of organ donation for transplantation during the taxable year in
9.20 which the human organ donation and transplantation occurs.
9.21 [EFFECTIVE DATE.] The changes to clause (10) of this
9.22 section are effective for taxable years beginning after December
9.23 31, 2002. The rest of this section is effective for taxable
9.24 years beginning after December 31, 2003.
9.25 Sec. 5. Minnesota Statutes 2003 Supplement, section
9.26 290.01, subdivision 19c, is amended to read:
9.27 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE
9.28 INCOME.] For corporations, there shall be added to federal
9.29 taxable income:
9.30 (1) the amount of any deduction taken for federal income
9.31 tax purposes for income, excise, or franchise taxes based on net
9.32 income or related minimum taxes, including but not limited to
9.33 the tax imposed under section 290.0922, paid by the corporation
9.34 to Minnesota, another state, a political subdivision of another
9.35 state, the District of Columbia, or any foreign country or
9.36 possession of the United States;
10.1 (2) interest not subject to federal tax upon obligations
10.2 of: the United States, its possessions, its agencies, or its
10.3 instrumentalities; the state of Minnesota or any other state,
10.4 any of its political or governmental subdivisions, any of its
10.5 municipalities, or any of its governmental agencies or
10.6 instrumentalities; the District of Columbia; or Indian tribal
10.7 governments;
10.8 (3) exempt-interest dividends received as defined in
10.9 section 852(b)(5) of the Internal Revenue Code;
10.10 (4) the amount of any net operating loss deduction taken
10.11 for federal income tax purposes under section 172 or 832(c)(10)
10.12 of the Internal Revenue Code or operations loss deduction under
10.13 section 810 of the Internal Revenue Code;
10.14 (5) the amount of any special deductions taken for federal
10.15 income tax purposes under sections 241 to 247 of the Internal
10.16 Revenue Code;
10.17 (6) losses from the business of mining, as defined in
10.18 section 290.05, subdivision 1, clause (a), that are not subject
10.19 to Minnesota income tax;
10.20 (7) the amount of any capital losses deducted for federal
10.21 income tax purposes under sections 1211 and 1212 of the Internal
10.22 Revenue Code;
10.23 (8) the exempt foreign trade income of a foreign sales
10.24 corporation under sections 921(a) and 291 of the Internal
10.25 Revenue Code;
10.26 (9) the amount of percentage depletion deducted under
10.27 sections 611 through 614 and 291 of the Internal Revenue Code;
10.28 (10) for certified pollution control facilities placed in
10.29 service in a taxable year beginning before December 31, 1986,
10.30 and for which amortization deductions were elected under section
10.31 169 of the Internal Revenue Code of 1954, as amended through
10.32 December 31, 1985, the amount of the amortization deduction
10.33 allowed in computing federal taxable income for those
10.34 facilities;
10.35 (11) the amount of any deemed dividend from a foreign
10.36 operating corporation determined pursuant to section 290.17,
11.1 subdivision 4, paragraph (g);
11.2 (12) the amount of any environmental tax paid under section
11.3 59(a) of the Internal Revenue Code;
11.4 (13) the amount of a partner's pro rata share of net income
11.5 which does not flow through to the partner because the
11.6 partnership elected to pay the tax on the income under section
11.7 6242(a)(2) of the Internal Revenue Code;
11.8 (14) the amount of net income excluded under section 114 of
11.9 the Internal Revenue Code;
11.10 (15) any increase in subpart F income, as defined in
11.11 section 952(a) of the Internal Revenue Code, for the taxable
11.12 year when subpart F income is calculated without regard to the
11.13 provisions of section 614 of Public Law 107-147; and
11.14 (16) 80 percent of the depreciation deduction allowed under
11.15 section 168(k) of the Internal Revenue Code. For purposes of
11.16 this clause, if the taxpayer has an activity that in the taxable
11.17 year generates a deduction for depreciation under section 168(k)
11.18 and the activity generates a loss for the taxable year that the
11.19 taxpayer is not allowed to claim for the taxable year, "the
11.20 depreciation allowed under section 168(k)" for the taxable year
11.21 is limited to excess of the depreciation claimed by the activity
11.22 under section 168(k) over the amount of the loss from the
11.23 activity that is not allowed in the taxable year. In succeeding
11.24 taxable years when the losses not allowed in the taxable year
11.25 are allowed, the depreciation under section 168(k) is allowed;
11.26 and
11.27 (17) the excess of deductions over income attributable to
11.28 tax-exempt property, as provided under section 290.0711.
11.29 [EFFECTIVE DATE.] This section is effective for leases and
11.30 service contracts or similar arrangements entered into after
11.31 February 5, 2004, and for taxable years beginning after December
11.32 31, 2003.
11.33 Sec. 6. Minnesota Statutes 2003 Supplement, section
11.34 290.01, subdivision 19d, is amended to read:
11.35 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL
11.36 TAXABLE INCOME.] For corporations, there shall be subtracted
12.1 from federal taxable income after the increases provided in
12.2 subdivision 19c:
12.3 (1) the amount of foreign dividend gross-up added to gross
12.4 income for federal income tax purposes under section 78 of the
12.5 Internal Revenue Code;
12.6 (2) the amount of salary expense not allowed for federal
12.7 income tax purposes due to claiming the federal jobs credit
12.8 under section 51 of the Internal Revenue Code;
12.9 (3) any dividend (not including any distribution in
12.10 liquidation) paid within the taxable year by a national or state
12.11 bank to the United States, or to any instrumentality of the
12.12 United States exempt from federal income taxes, on the preferred
12.13 stock of the bank owned by the United States or the
12.14 instrumentality;
12.15 (4) amounts disallowed for intangible drilling costs due to
12.16 differences between this chapter and the Internal Revenue Code
12.17 in taxable years beginning before January 1, 1987, as follows:
12.18 (i) to the extent the disallowed costs are represented by
12.19 physical property, an amount equal to the allowance for
12.20 depreciation under Minnesota Statutes 1986, section 290.09,
12.21 subdivision 7, subject to the modifications contained in
12.22 subdivision 19e; and
12.23 (ii) to the extent the disallowed costs are not represented
12.24 by physical property, an amount equal to the allowance for cost
12.25 depletion under Minnesota Statutes 1986, section 290.09,
12.26 subdivision 8;
12.27 (5) the deduction for capital losses pursuant to sections
12.28 1211 and 1212 of the Internal Revenue Code, except that:
12.29 (i) for capital losses incurred in taxable years beginning
12.30 after December 31, 1986, capital loss carrybacks shall not be
12.31 allowed;
12.32 (ii) for capital losses incurred in taxable years beginning
12.33 after December 31, 1986, a capital loss carryover to each of the
12.34 15 taxable years succeeding the loss year shall be allowed;
12.35 (iii) for capital losses incurred in taxable years
12.36 beginning before January 1, 1987, a capital loss carryback to
13.1 each of the three taxable years preceding the loss year, subject
13.2 to the provisions of Minnesota Statutes 1986, section 290.16,
13.3 shall be allowed; and
13.4 (iv) for capital losses incurred in taxable years beginning
13.5 before January 1, 1987, a capital loss carryover to each of the
13.6 five taxable years succeeding the loss year to the extent such
13.7 loss was not used in a prior taxable year and subject to the
13.8 provisions of Minnesota Statutes 1986, section 290.16, shall be
13.9 allowed;
13.10 (6) an amount for interest and expenses relating to income
13.11 not taxable for federal income tax purposes, if (i) the income
13.12 is taxable under this chapter and (ii) the interest and expenses
13.13 were disallowed as deductions under the provisions of section
13.14 171(a)(2), 265 or 291 of the Internal Revenue Code in computing
13.15 federal taxable income;
13.16 (7) in the case of mines, oil and gas wells, other natural
13.17 deposits, and timber for which percentage depletion was
13.18 disallowed pursuant to subdivision 19c, clause (11), a
13.19 reasonable allowance for depletion based on actual cost. In the
13.20 case of leases the deduction must be apportioned between the
13.21 lessor and lessee in accordance with rules prescribed by the
13.22 commissioner. In the case of property held in trust, the
13.23 allowable deduction must be apportioned between the income
13.24 beneficiaries and the trustee in accordance with the pertinent
13.25 provisions of the trust, or if there is no provision in the
13.26 instrument, on the basis of the trust's income allocable to
13.27 each;
13.28 (8) for certified pollution control facilities placed in
13.29 service in a taxable year beginning before December 31, 1986,
13.30 and for which amortization deductions were elected under section
13.31 169 of the Internal Revenue Code of 1954, as amended through
13.32 December 31, 1985, an amount equal to the allowance for
13.33 depreciation under Minnesota Statutes 1986, section 290.09,
13.34 subdivision 7;
13.35 (9) amounts included in federal taxable income that are due
13.36 to refunds of income, excise, or franchise taxes based on net
14.1 income or related minimum taxes paid by the corporation to
14.2 Minnesota, another state, a political subdivision of another
14.3 state, the District of Columbia, or a foreign country or
14.4 possession of the United States to the extent that the taxes
14.5 were added to federal taxable income under section 290.01,
14.6 subdivision 19c, clause (1), in a prior taxable year;
14.7 (10) 80 percent of royalties, fees, or other like income
14.8 accrued or received from a foreign operating corporation or a
14.9 foreign corporation which is part of the same unitary business
14.10 as the receiving corporation;
14.11 (11) income or gains from the business of mining as defined
14.12 in section 290.05, subdivision 1, clause (a), that are not
14.13 subject to Minnesota franchise tax;
14.14 (12) the amount of handicap access expenditures in the
14.15 taxable year which are not allowed to be deducted or capitalized
14.16 under section 44(d)(7) of the Internal Revenue Code;
14.17 (13) the amount of qualified research expenses not allowed
14.18 for federal income tax purposes under section 280C(c) of the
14.19 Internal Revenue Code, but only to the extent that the amount
14.20 exceeds the amount of the credit allowed under section 290.068;
14.21 (14) the amount of salary expenses not allowed for federal
14.22 income tax purposes due to claiming the Indian employment credit
14.23 under section 45A(a) of the Internal Revenue Code;
14.24 (15) the amount of any refund of environmental taxes paid
14.25 under section 59A of the Internal Revenue Code;
14.26 (16) for taxable years beginning before January 1, 2008,
14.27 the amount of the federal small ethanol producer credit allowed
14.28 under section 40(a)(3) of the Internal Revenue Code which is
14.29 included in gross income under section 87 of the Internal
14.30 Revenue Code;
14.31 (17) for a corporation whose foreign sales corporation, as
14.32 defined in section 922 of the Internal Revenue Code, constituted
14.33 a foreign operating corporation during any taxable year ending
14.34 before January 1, 1995, and a return was filed by August 15,
14.35 1996, claiming the deduction under section 290.21, subdivision
14.36 4, for income received from the foreign operating corporation,
15.1 an amount equal to 1.23 multiplied by the amount of income
15.2 excluded under section 114 of the Internal Revenue Code,
15.3 provided the income is not income of a foreign operating
15.4 company;
15.5 (18) any decrease in subpart F income, as defined in
15.6 section 952(a) of the Internal Revenue Code, for the taxable
15.7 year when subpart F income is calculated without regard to the
15.8 provisions of section 614 of Public Law 107-147; and
15.9 (19) in each of the five tax years immediately following
15.10 the tax year in which an addition is required under subdivision
15.11 19c, clause (16), an amount equal to one-fifth of the delayed
15.12 depreciation. For purposes of this clause, "delayed
15.13 depreciation" means the amount of the addition made by the
15.14 taxpayer under subdivision 19c, clause (16). The resulting
15.15 delayed depreciation cannot be less than zero; and
15.16 (20) amounts allowed as carryover subtractions attributable
15.17 to tax-exempt property, as provided under section 290.0711.
15.18 [EFFECTIVE DATE.] This section is effective for leases and
15.19 service contracts or similar arrangements entered into after
15.20 February 5, 2004, and for taxable years beginning after December
15.21 31, 2003.
15.22 Sec. 7. Minnesota Statutes 2002, section 290.0674,
15.23 subdivision 2, is amended to read:
15.24 Subd. 2. [LIMITATIONS.] (a) For claimants with income not
15.25 greater than $33,500, the maximum credit allowed is $1,000 per
15.26 qualifying child and $2,000 per family for a family with one
15.27 qualifying child and $2,000 for a family with two or more
15.28 qualifying children. No credit is allowed for education-related
15.29 expenses for claimants with income greater than $37,500. The
15.30 maximum credit per for a family with one qualifying child is
15.31 reduced by $1 for each $4 of household income over $33,500, and
15.32 the maximum credit per for a family with more than one
15.33 qualifying child is reduced by $2 for each $4 of household
15.34 income over $33,500, but in no case is the credit less than zero.
15.35 For purposes of this section "income" has the meaning given
15.36 in section 290.067, subdivision 2a. In the case of a married
16.1 claimant, a credit is not allowed unless a joint income tax
16.2 return is filed.
16.3 (b) For a nonresident or part-year resident, the credit
16.4 determined under subdivision 1 and the maximum credit amount in
16.5 paragraph (a) must be allocated using the percentage calculated
16.6 in section 290.06, subdivision 2c, paragraph (e).
16.7 [EFFECTIVE DATE.] This section is effective for taxable
16.8 years beginning after December 31, 2003.
16.9 Sec. 8. [290.0711] [TAX-EXEMPT PROPERTY; LIMITS ON TAX
16.10 BENEFITS.]
16.11 Subdivision 1. [DEFINITIONS.] (a) For purposes of this
16.12 section, the following terms have the meanings given.
16.13 (b) "Tax-exempt use property" has the meaning given in
16.14 section 168(h) of the Internal Revenue Code, except the
16.15 provisions of clause (2)(C)(ii) and paragraph (3) do not apply.
16.16 If tangible property is subject to a service contract or other
16.17 similar arrangement between a taxpayer or any related person and
16.18 any tax-exempt entity, the contract or arrangement must be
16.19 treated in the same manner as if it is tax-exempt property under
16.20 this subdivision.
16.21 (c) "Taxpayer" means a corporation, subject to the
16.22 corporate franchise tax under this chapter, that is claiming the
16.23 deduction on the federal return and any member of its unitary
16.24 group.
16.25 Subd. 2. [ADDITION OF EXCESS DEDUCTIONS.] In computing
16.26 Minnesota taxable income, the taxpayer must add to federal
16.27 taxable income the excess of:
16.28 (1) the aggregate amount of deductions claimed in computing
16.29 federal taxable income with respect to tax-exempt use property;
16.30 over
16.31 (2) the aggregate amount of income includable in federal
16.32 gross income of the taxpayer for the taxable year with respect
16.33 to tax-exempt use property.
16.34 Subd. 3. [CARRYOVER SUBTRACTION.] Unless otherwise
16.35 provided in this section, any addition under subdivision 2 may
16.36 be carried to a later taxable year and claimed as a subtraction
17.1 reducing the federal taxable income of the taxpayer to the
17.2 extent that income with respect to tax-exempt use property
17.3 exceeds the amount of deductions claimed with respect to
17.4 tax-exempt properties in computing federal taxable income for
17.5 that taxable year.
17.6 Subd. 4. [SPECIAL RULES.] (a) The following rules apply to
17.7 the computation of the addition under subdivision 2.
17.8 (b) Subdivision 2 applies to deductions directly allocable
17.9 to any tax-exempt use property and to a proper share of other
17.10 deductions that are not directly allocable to tax exempt.
17.11 (c) If property of a taxpayer ceases to be tax-exempt use
17.12 property in the hands of the taxpayer, any unused carryover
17.13 under subdivision 3 with respect to the property is only
17.14 allowable as a subtraction for any taxable year to the extent of
17.15 any net income of the taxpayer that is allocable to the property
17.16 that ceased to be tax-exempt property.
17.17 (d) If during the taxable year, a taxpayer disposes of the
17.18 taxpayer's entire interest in tax-exempt use property, the
17.19 taxpayer may claim a subtraction for the lesser of:
17.20 (1) the amount of gain realized on the disposition and
17.21 includable in federal taxable income; or
17.22 (2) the amount of additions under subdivision 2
17.23 attributable to the property and not claimed in a later year
17.24 under subdivision 3.
17.25 [EFFECTIVE DATE.] This section is effective for leases and
17.26 service contracts or similar arrangements entered into after
17.27 February 5, 2004, and for taxable years beginning after December
17.28 31, 2003.
17.29 Sec. 9. Minnesota Statutes 2003 Supplement, section
17.30 290.091, subdivision 2, is amended to read:
17.31 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by
17.32 this section, the following terms have the meanings given:
17.33 (a) "Alternative minimum taxable income" means the sum of
17.34 the following for the taxable year:
17.35 (1) the taxpayer's federal alternative minimum taxable
17.36 income as defined in section 55(b)(2) of the Internal Revenue
18.1 Code;
18.2 (2) the taxpayer's itemized deductions allowed in computing
18.3 federal alternative minimum taxable income, but excluding:
18.4 (i) the charitable contribution deduction under section 170
18.5 of the Internal Revenue Code;
18.6 (A) for taxable years beginning before January 1, 2004, to
18.7 the extent that the deduction exceeds 1.0 percent of adjusted
18.8 gross income, as defined;
18.9 (B) for taxable years beginning after December 31, 2003,
18.10 and before January 1, 2005, to the extent the deduction exceeds
18.11 0.25 percent of adjusted gross income;
18.12 (C) for taxable years beginning after December 31, 2004,
18.13 and before January 1, 2006, to the extent the deduction exceeds
18.14 0.1 percent of adjusted gross income;
18.15 (D) for taxable years beginning after December 31, 2005, to
18.16 the full extent of the deduction.
18.17 For purposes of this clause, "adjusted gross income" has
18.18 the meaning given in section 62 of the Internal Revenue Code;
18.19 (ii) the medical expense deduction;
18.20 (iii) the casualty, theft, and disaster loss deduction; and
18.21 (iv) the impairment-related work expenses of a disabled
18.22 person;
18.23 (3) for depletion allowances computed under section 613A(c)
18.24 of the Internal Revenue Code, with respect to each property (as
18.25 defined in section 614 of the Internal Revenue Code), to the
18.26 extent not included in federal alternative minimum taxable
18.27 income, the excess of the deduction for depletion allowable
18.28 under section 611 of the Internal Revenue Code for the taxable
18.29 year over the adjusted basis of the property at the end of the
18.30 taxable year (determined without regard to the depletion
18.31 deduction for the taxable year);
18.32 (4) to the extent not included in federal alternative
18.33 minimum taxable income, the amount of the tax preference for
18.34 intangible drilling cost under section 57(a)(2) of the Internal
18.35 Revenue Code determined without regard to subparagraph (E);
18.36 (5) to the extent not included in federal alternative
19.1 minimum taxable income, the amount of interest income as
19.2 provided by section 290.01, subdivision 19a, clause (1); and
19.3 (6) the amount of addition required by section 290.01,
19.4 subdivision 19a, clause (7);
19.5 less the sum of the amounts determined under the following:
19.6 (1) interest income as defined in section 290.01,
19.7 subdivision 19b, clause (1);
19.8 (2) an overpayment of state income tax as provided by
19.9 section 290.01, subdivision 19b, clause (2), to the extent
19.10 included in federal alternative minimum taxable income;
19.11 (3) the amount of investment interest paid or accrued
19.12 within the taxable year on indebtedness to the extent that the
19.13 amount does not exceed net investment income, as defined in
19.14 section 163(d)(4) of the Internal Revenue Code. Interest does
19.15 not include amounts deducted in computing federal adjusted gross
19.16 income; and
19.17 (4) amounts subtracted from federal taxable income as
19.18 provided by section 290.01, subdivision 19b, clauses (10) and
19.19 (11) to (14).
19.20 In the case of an estate or trust, alternative minimum
19.21 taxable income must be computed as provided in section 59(c) of
19.22 the Internal Revenue Code.
19.23 (b) "Investment interest" means investment interest as
19.24 defined in section 163(d)(3) of the Internal Revenue Code.
19.25 (c) "Tentative minimum tax" equals 6.4 percent of
19.26 alternative minimum taxable income after subtracting the
19.27 exemption amount determined under subdivision 3.
19.28 (d) "Regular tax" means the tax that would be imposed under
19.29 this chapter (without regard to this section and section
19.30 290.032), reduced by the sum of the nonrefundable credits
19.31 allowed under this chapter.
19.32 (e) "Net minimum tax" means the minimum tax imposed by this
19.33 section.
19.34 [EFFECTIVE DATE.] This section is effective for taxable
19.35 years beginning after December 31, 2003.
19.36 Sec. 10. Minnesota Statutes 2002, section 290.091,
20.1 subdivision 3, is amended to read:
20.2 Subd. 3. [EXEMPTION AMOUNT.] (a) For purposes of computing
20.3 the alternative minimum tax, the exemption amount is:
20.4 (1) for taxable years beginning before January 1, 2004, the
20.5 exemption determined under section 55(d) of the Internal Revenue
20.6 Code, as amended through December 31, 1992;
20.7 (2) for taxable years beginning after December 31, 2003,
20.8 and before January 1, 2005, $41,000 for married couples filing
20.9 joint returns; $20,500 for married individuals filing separate
20.10 returns, estates, and trusts; and $30,750 for unmarried
20.11 individuals;
20.12 (3) for taxable years beginning after December 31, 2004,
20.13 and before January 1, 2006, $42,000 for married couples filing
20.14 joint returns; $21,000 for married individuals filing separate
20.15 returns, estates, and trusts; and $31,500 for unmarried
20.16 individuals;
20.17 (4) for taxable years beginning after December 31, 2005,
20.18 $44,000 for married couples filing joint returns; $22,000 for
20.19 married individuals filing separate returns, estates, and
20.20 trusts; and $33,000 for unmarried individuals.
20.21 (b) The exemption amount determined under this subdivision
20.22 is subject to the phase out under section 55(d)(3) of the
20.23 Internal Revenue Code, except that alternative minimum taxable
20.24 income as determined under this section must be substituted in
20.25 the computation of the phase out under section 55(d)(3).
20.26 (c) For taxable years beginning after December 31, 2006,
20.27 the exemption amount under paragraph (a), clause (4), must be
20.28 adjusted for inflation. The commissioner shall make the
20.29 inflation adjustments in accordance with section 1(f) of the
20.30 Internal Revenue Code except that for the purposes of this
20.31 subdivision the percentage increase must be determined from the
20.32 year starting September 1, 2005, and ending August 31, 2006, as
20.33 the base year for adjusting for inflation for the tax year
20.34 beginning after December 31, 2006. The determination of the
20.35 commissioner under this subdivision is not a rule under the
20.36 Administrative Procedure Act.
21.1 [EFFECTIVE DATE.] This section is effective for taxable
21.2 years beginning after December 31, 2003.
21.3 Sec. 11. Minnesota Statutes 2002, section 290.17, is
21.4 amended by adding a subdivision to read:
21.5 Subd. 8. [FOREIGN OPERATING CORPORATIONS; COMMISSIONER'S
21.6 AUTHORITY.] (a) This subdivision applies to a unitary business
21.7 that includes a foreign operating corporation.
21.8 (b) The commissioner may disqualify a corporation as a
21.9 foreign operating corporation, if the commissioner finds that:
21.10 (1) there was no substantial independent business purpose,
21.11 other than the reduction of tax, for establishment of the
21.12 foreign operating corporation;
21.13 (2) the income of the foreign operating corporation, on a
21.14 multiyear basis, is primarily derived from or fairly
21.15 attributable to domestic operations or sources of the unitary
21.16 business; or
21.17 (3) a significant amount of inter-company transactions
21.18 involving the foreign operating corporation lack economic
21.19 substance or do not reflect market prices.
21.20 Disqualification of a foreign operating corporation under
21.21 this paragraph applies for the taxable year and two subsequent
21.22 taxable years.
21.23 (c) The commissioner may disallow all or part of the
21.24 subtraction for royalties, fees, and like income under section
21.25 290.01, subdivision 19d, clause (10), or all or part of the
21.26 deduction for deemed dividends of the foreign operating
21.27 corporation under section 290.21, if the commissioner finds that
21.28 the income or transactions on which the deductions are based:
21.29 (1) lack economic substance or fail to reflect market
21.30 prices; or
21.31 (2) have no substantial independent business purpose other
21.32 than the reduction of tax.
21.33 (d) The amount of any tax imposed as a result of a
21.34 commissioner finding under this subdivision is increased by a
21.35 surtax of 15 percent.
21.36 [EFFECTIVE DATE.] This section is effective January 1,
22.1 2005, for taxable years beginning after December 31, 2003.
22.2 Sec. 12. Minnesota Statutes 2002, section 290.191,
22.3 subdivision 2, is amended to read:
22.4 Subd. 2. [APPORTIONMENT FORMULA OF GENERAL APPLICATION.]
22.5 Except for those trades or businesses required to use a
22.6 different formula under subdivision 3 or section 290.36, and for
22.7 those trades or businesses that receive permission to use some
22.8 other method under section 290.20 or under subdivision 4, a
22.9 trade or business required to apportion its net income must
22.10 apportion its income to this state on the basis of the
22.11 percentage obtained by taking the sum of:
22.12 (1) 75 percent of the percentage which the sales made
22.13 within this state in connection with the trade or business
22.14 during the tax period are of the total sales wherever made in
22.15 connection with the trade or business during the tax period;
22.16 (2) 12.5 percent of the percentage which the total tangible
22.17 property used by the taxpayer in this state in connection with
22.18 the trade or business during the tax period is of the total
22.19 tangible property, wherever located, used by the taxpayer in
22.20 connection with the trade or business during the tax period; and
22.21 (3) 12.5 percent of the percentage which the taxpayer's
22.22 total payrolls paid or incurred in this state or paid in respect
22.23 to labor performed in this state in connection with the trade or
22.24 business during the tax period are of the taxpayer's total
22.25 payrolls paid or incurred in connection with the trade or
22.26 business during the tax period.
22.27 For tax years beginning after December 31, 2004, but before
22.28 January 1, 2006, the apportionment percentage in clause (1)
22.29 shall be 78 percent and the apportionment percentages in clauses
22.30 (2) and (3) shall be 11 percent.
22.31 For tax years beginning after December 31, 2005, but before
22.32 January 1, 2007, the apportionment percentage in clause (1)
22.33 shall be 81 percent and the apportionment percentages in clauses
22.34 (2) and (3) shall be 9.5 percent.
22.35 For tax years beginning after December 31, 2006, but before
22.36 January 1, 2008, the apportionment percentage in clause (1)
23.1 shall be 84 percent and the apportionment percentages in clauses
23.2 (2) and (3) shall be 8 percent.
23.3 For tax years beginning after December 31, 2007, but before
23.4 January 1, 2009, the apportionment percentage in clause (1)
23.5 shall be 87 percent and the apportionment percentages in clauses
23.6 (2) and (3) shall be 6.5 percent.
23.7 For tax years beginning after December 31, 2008, but before
23.8 January 1, 2010, the apportionment percentage in clause (1)
23.9 shall be 90 percent and the apportionment percentages in clauses
23.10 (2) and (3) shall be 5 percent.
23.11 For tax years beginning after December 31, 2009, but before
23.12 January 1, 2011, the apportionment percentage in clause (1)
23.13 shall be 93 percent and the apportionment percentages in clauses
23.14 (2) and (3) shall be 3.5 percent.
23.15 For tax years beginning after December 31, 2010, but before
23.16 January 1, 2012, the apportionment percentage in clause (1)
23.17 shall be 96 percent and the apportionment percentages in clauses
23.18 (2) and (3) shall be 2 percent.
23.19 For tax years beginning after December 31, 2011, the
23.20 apportionment percentage in clause (1) shall be 100 percent and
23.21 the apportionment percentages in clauses (2) and (3) shall be
23.22 zero percent.
23.23 [EFFECTIVE DATE.] This section is effective the day
23.24 following final enactment.
23.25 Sec. 13. Minnesota Statutes 2002, section 290.191,
23.26 subdivision 3, is amended to read:
23.27 Subd. 3. [APPORTIONMENT FORMULA FOR FINANCIAL
23.28 INSTITUTIONS.] Except for an investment company required to
23.29 apportion its income under section 290.36, a financial
23.30 institution that is required to apportion its net income must
23.31 apportion its net income to this state on the basis of the
23.32 percentage obtained by taking the sum of:
23.33 (1) 75 percent of the percentage which the receipts from
23.34 within this state in connection with the trade or business
23.35 during the tax period are of the total receipts in connection
23.36 with the trade or business during the tax period, from wherever
24.1 derived;
24.2 (2) 12.5 percent of the percentage which the sum of the
24.3 total tangible property used by the taxpayer in this state and
24.4 the intangible property owned by the taxpayer and attributed to
24.5 this state in connection with the trade or business during the
24.6 tax period is of the sum of the total tangible property,
24.7 wherever located, used by the taxpayer and the intangible
24.8 property owned by the taxpayer and attributed to all states in
24.9 connection with the trade or business during the tax period; and
24.10 (3) 12.5 percent of the percentage which the taxpayer's
24.11 total payrolls paid or incurred in this state or paid in respect
24.12 to labor performed in this state in connection with the trade or
24.13 business during the tax period are of the taxpayer's total
24.14 payrolls paid or incurred in connection with the trade or
24.15 business during the tax period.
24.16 For tax years beginning after December 31, 2004, but before
24.17 January 1, 2006, the apportionment percentage in clause (1)
24.18 shall be 78 percent and the apportionment percentages in clauses
24.19 (2) and (3) shall be 11 percent.
24.20 For tax years beginning after December 31, 2005, but before
24.21 January 1, 2007, the apportionment percentage in clause (1)
24.22 shall be 81 percent and the apportionment percentages in clauses
24.23 (2) and (3) shall be 9.5 percent.
24.24 For tax years beginning after December 31, 2006, but before
24.25 January 1, 2008, the apportionment percentage in clause (1)
24.26 shall be 84 percent and the apportionment percentages in clauses
24.27 (2) and (3) shall be 8 percent.
24.28 For tax years beginning after December 31, 2007, but before
24.29 January 1, 2009, the apportionment percentage in clause (1)
24.30 shall be 87 percent and the apportionment percentages in clauses
24.31 (2) and (3) shall be 6.5 percent.
24.32 For tax years beginning after December 31, 2008, but before
24.33 January 1, 2010, the apportionment percentage in clause (1)
24.34 shall be 90 percent and the apportionment percentages in clauses
24.35 (2) and (3) shall be 5 percent.
24.36 For tax years beginning after December 31, 2009, but before
25.1 January 1, 2011, the apportionment percentage in clause (1)
25.2 shall be 93 percent and the apportionment percentages in clauses
25.3 (2) and (3) shall be 3.5 percent.
25.4 For tax years beginning after December 31, 2010, but before
25.5 January 1, 2012, the apportionment percentage in clause (1)
25.6 shall be 96 percent and the apportionment percentages in clauses
25.7 (2) and (3) shall be 2 percent.
25.8 For tax years beginning after December 31, 2011, the
25.9 apportionment percentage in clause (1) shall be 100 percent and
25.10 the apportionment percentages in clauses (2) and (3) shall be
25.11 zero percent.
25.12 [EFFECTIVE DATE.] This section is effective the day
25.13 following final enactment.
25.14 Sec. 14. Minnesota Statutes 2002, section 290.191,
25.15 subdivision 5, is amended to read:
25.16 Subd. 5. [DETERMINATION OF SALES FACTOR.] For purposes of
25.17 this section, the following rules apply in determining the sales
25.18 factor.
25.19 (a) The sales factor includes all sales, gross earnings, or
25.20 receipts received in the ordinary course of the business, except
25.21 that the following types of income are not included in the sales
25.22 factor:
25.23 (1) interest;
25.24 (2) dividends;
25.25 (3) sales of capital assets as defined in section 1221 of
25.26 the Internal Revenue Code;
25.27 (4) sales of property used in the trade or business, except
25.28 sales of leased property of a type which is regularly sold as
25.29 well as leased;
25.30 (5) sales of debt instruments as defined in section
25.31 1275(a)(1) of the Internal Revenue Code or sales of stock; and
25.32 (6) royalties, fees, or other like income of a type which
25.33 qualify for a subtraction from federal taxable income under
25.34 section 290.01, subdivision 19(d)(11); and
25.35 (7) lease or other payments received for tax-exempt
25.36 property, as defined in and subject to section 290.0711.
26.1 (b) Sales of tangible personal property are made within
26.2 this state if the property is received by a purchaser at a point
26.3 within this state, and the taxpayer is taxable in this state,
26.4 regardless of the f.o.b. point, other conditions of the sale, or
26.5 the ultimate destination of the property.
26.6 (c) Tangible personal property delivered to a common or
26.7 contract carrier or foreign vessel for delivery to a purchaser
26.8 in another state or nation is a sale in that state or nation,
26.9 regardless of f.o.b. point or other conditions of the sale.
26.10 (d) Notwithstanding paragraphs (b) and (c), when
26.11 intoxicating liquor, wine, fermented malt beverages, cigarettes,
26.12 or tobacco products are sold to a purchaser who is licensed by a
26.13 state or political subdivision to resell this property only
26.14 within the state of ultimate destination, the sale is made in
26.15 that state.
26.16 (e) Sales made by or through a corporation that is
26.17 qualified as a domestic international sales corporation under
26.18 section 992 of the Internal Revenue Code are not considered to
26.19 have been made within this state.
26.20 (f) Sales, rents, royalties, and other income in connection
26.21 with real property is attributed to the state in which the
26.22 property is located.
26.23 (g) Receipts from the lease or rental of tangible personal
26.24 property, including finance leases and true leases, must be
26.25 attributed to this state if the property is located in this
26.26 state and to other states if the property is not located in this
26.27 state. Receipts from the lease or rental of moving property
26.28 including, but not limited to, motor vehicles, rolling stock,
26.29 aircraft, vessels, or mobile equipment are included in the
26.30 numerator of the receipts factor to the extent that the property
26.31 is used in this state. The extent of the use of moving property
26.32 is determined as follows:
26.33 (1) A motor vehicle is used wholly in the state in which it
26.34 is registered.
26.35 (2) The extent that rolling stock is used in this state is
26.36 determined by multiplying the receipts from the lease or rental
27.1 of the rolling stock by a fraction, the numerator of which is
27.2 the miles traveled within this state by the leased or rented
27.3 rolling stock and the denominator of which is the total miles
27.4 traveled by the leased or rented rolling stock.
27.5 (3) The extent that an aircraft is used in this state is
27.6 determined by multiplying the receipts from the lease or rental
27.7 of the aircraft by a fraction, the numerator of which is the
27.8 number of landings of the aircraft in this state and the
27.9 denominator of which is the total number of landings of the
27.10 aircraft.
27.11 (4) The extent that a vessel, mobile equipment, or other
27.12 mobile property is used in the state is determined by
27.13 multiplying the receipts from the lease or rental of the
27.14 property by a fraction, the numerator of which is the number of
27.15 days during the taxable year the property was in this state and
27.16 the denominator of which is the total days in the taxable year.
27.17 (h) Royalties and other income not described in paragraph
27.18 (a), clause (6), received for the use of or for the privilege of
27.19 using intangible property, including patents, know-how,
27.20 formulas, designs, processes, patterns, copyrights, trade names,
27.21 service names, franchises, licenses, contracts, customer lists,
27.22 or similar items, must be attributed to the state in which the
27.23 property is used by the purchaser. If the property is used in
27.24 more than one state, the royalties or other income must be
27.25 apportioned to this state pro rata according to the portion of
27.26 use in this state. If the portion of use in this state cannot
27.27 be determined, the royalties or other income must be excluded
27.28 from both the numerator and the denominator. Intangible
27.29 property is used in this state if the purchaser uses the
27.30 intangible property or the rights therein in the regular course
27.31 of its business operations in this state, regardless of the
27.32 location of the purchaser's customers.
27.33 (i) Sales of intangible property are made within the state
27.34 in which the property is used by the purchaser. If the property
27.35 is used in more than one state, the sales must be apportioned to
27.36 this state pro rata according to the portion of use in this
28.1 state. If the portion of use in this state cannot be
28.2 determined, the sale must be excluded from both the numerator
28.3 and the denominator of the sales factor. Intangible property is
28.4 used in this state if the purchaser used the intangible property
28.5 in the regular course of its business operations in this state.
28.6 (j) Receipts from the performance of services must be
28.7 attributed to the state where the services are received. For
28.8 the purposes of this section, receipts from the performance of
28.9 services provided to a corporation, partnership, or trust may
28.10 only be attributed to a state where it has a fixed place of
28.11 doing business. If the state where the services are received is
28.12 not readily determinable or is a state where the corporation,
28.13 partnership, or trust receiving the service does not have a
28.14 fixed place of doing business, the services shall be deemed to
28.15 be received at the location of the office of the customer from
28.16 which the services were ordered in the regular course of the
28.17 customer's trade or business. If the ordering office cannot be
28.18 determined, the services shall be deemed to be received at the
28.19 office of the customer to which the services are billed.
28.20 [EFFECTIVE DATE.] This section is effective for leases and
28.21 service contracts or similar arrangements entered into after
28.22 February 5, 2004, and for taxable years beginning after December
28.23 31, 2003.
28.24 Sec. 15. Minnesota Statutes 2002, section 290.191,
28.25 subdivision 6, is amended to read:
28.26 Subd. 6. [DETERMINATION OF RECEIPTS FACTOR FOR FINANCIAL
28.27 INSTITUTIONS.] (a) For purposes of this section, the rules in
28.28 this subdivision and subdivision 8 apply in determining the
28.29 receipts factor for financial institutions.
28.30 (b) "Receipts" for this purpose means gross income,
28.31 including net taxable gain on disposition of assets, including
28.32 securities and money market instruments, when derived from
28.33 transactions and activities in the regular course of the
28.34 taxpayer's trade or business.
28.35 (c) "Money market instruments" means federal funds sold and
28.36 securities purchased under agreements to resell, commercial
29.1 paper, banker's acceptances, and purchased certificates of
29.2 deposit and similar instruments to the extent that the
29.3 instruments are reflected as assets under generally accepted
29.4 accounting principles.
29.5 (d) "Securities" means United States Treasury securities,
29.6 obligations of United States government agencies and
29.7 corporations, obligations of state and political subdivisions,
29.8 corporate stock, bonds, and other securities, participations in
29.9 securities backed by mortgages held by United States or state
29.10 government agencies, loan-backed securities and similar
29.11 investments to the extent the investments are reflected as
29.12 assets under generally accepted accounting principles.
29.13 (e) Receipts from the lease or rental of real or tangible
29.14 personal property, including both finance leases and true
29.15 leases, must be attributed to this state if the property is
29.16 located in this state. Receipts from the lease or rental of
29.17 tangible personal property that is characteristically moving
29.18 property, including, but not limited to, motor vehicles, rolling
29.19 stock, aircraft, vessels, or mobile equipment are included in
29.20 the numerator of the receipts factor to the extent that the
29.21 property is used in this state. The extent of the use of moving
29.22 property is determined as follows:
29.23 (1) A motor vehicle is used wholly in the state in which it
29.24 is registered.
29.25 (2) The extent that rolling stock is used in this state is
29.26 determined by multiplying the receipts from the lease or rental
29.27 of the rolling stock by a fraction, the numerator of which is
29.28 the miles traveled within this state by the leased or rented
29.29 rolling stock and the denominator of which is the total miles
29.30 traveled by the leased or rented rolling stock.
29.31 (3) The extent that an aircraft is used in this state is
29.32 determined by multiplying the receipts from the lease or rental
29.33 of the aircraft by a fraction, the numerator of which is the
29.34 number of landings of the aircraft in this state and the
29.35 denominator of which is the total number of landings of the
29.36 aircraft.
30.1 (4) The extent that a vessel, mobile equipment, or other
30.2 mobile property is used in the state is determined by
30.3 multiplying the receipts from the lease or rental of property by
30.4 a fraction, the numerator of which is the number of days during
30.5 the taxable year the property was in this state and the
30.6 denominator of which is the total days in the taxable year.
30.7 (f) Interest income and other receipts from assets in the
30.8 nature of loans that are secured primarily by real estate or
30.9 tangible personal property must be attributed to this state if
30.10 the security property is located in this state under the
30.11 principles stated in paragraph (e).
30.12 (g) Interest income and other receipts from consumer loans
30.13 not secured by real or tangible personal property that are made
30.14 to residents of this state, whether at a place of business, by
30.15 traveling loan officer, by mail, by telephone or other
30.16 electronic means, must be attributed to this state.
30.17 (h) Interest income and other receipts from commercial
30.18 loans and installment obligations that are unsecured by real or
30.19 tangible personal property or secured by intangible property
30.20 must be attributed to this state if the proceeds of the loan are
30.21 to be applied in this state. If it cannot be determined where
30.22 the funds are to be applied, the income and receipts are
30.23 attributed to the state in which the office of the borrower from
30.24 which the application would be made in the regular course of
30.25 business is located. If this cannot be determined, the
30.26 transaction is disregarded in the apportionment formula.
30.27 (i) Interest income and other receipts from a participating
30.28 financial institution's portion of participation and syndication
30.29 loans must be attributed under paragraphs (e) to (h). A
30.30 participation loan is an arrangement in which a lender makes a
30.31 loan to a borrower and then sells, assigns, or otherwise
30.32 transfers all or a part of the loan to a purchasing financial
30.33 institution. A syndication loan is a loan transaction involving
30.34 multiple financial institutions in which all the lenders are
30.35 named as parties to the loan documentation, are known to the
30.36 borrower, and have privity of contract with the borrower.
31.1 (j) Interest income and other receipts including service
31.2 charges from financial institution credit card and travel and
31.3 entertainment credit card receivables and credit card holders'
31.4 fees must be attributed to the state to which the card charges
31.5 and fees are regularly billed.
31.6 (k) Merchant discount income derived from financial
31.7 institution credit card holder transactions with a merchant must
31.8 be attributed to the state in which the merchant is located. In
31.9 the case of merchants located within and outside the state, only
31.10 receipts from merchant discounts attributable to sales made from
31.11 locations within the state are attributed to this state. It is
31.12 presumed, subject to rebuttal, that the location of a merchant
31.13 is the address shown on the invoice submitted by the merchant to
31.14 the taxpayer.
31.15 (l) Receipts from the performance of fiduciary and other
31.16 services must be attributed to the state in which the services
31.17 are received. For the purposes of this section, services
31.18 provided to a corporation, partnership, or trust must be
31.19 attributed to a state where it has a fixed place of doing
31.20 business. If the state where the services are received is not
31.21 readily determinable or is a state where the corporation,
31.22 partnership, or trust does not have a fixed place of doing
31.23 business, the services shall be deemed to be received at the
31.24 location of the office of the customer from which the services
31.25 were ordered in the regular course of the customer's trade or
31.26 business. If the ordering office cannot be determined, the
31.27 services shall be deemed to be received at the office of the
31.28 customer to which the services are billed.
31.29 (m) Receipts from the issuance of travelers checks and
31.30 money orders must be attributed to the state in which the checks
31.31 and money orders are purchased.
31.32 (n) Receipts from investments of a financial institution in
31.33 securities and from money market instruments must be apportioned
31.34 to this state based on the ratio that total deposits from this
31.35 state, its residents, including any business with an office or
31.36 other place of business in this state, its political
32.1 subdivisions, agencies, and instrumentalities bear to the total
32.2 deposits from all states, their residents, their political
32.3 subdivisions, agencies, and instrumentalities. In the case of
32.4 an unregulated financial institution subject to this section,
32.5 these receipts are apportioned to this state based on the ratio
32.6 that its gross business income, excluding such receipts, earned
32.7 from sources within this state bears to gross business income,
32.8 excluding such receipts, earned from sources within all states.
32.9 For purposes of this subdivision, deposits made by this state,
32.10 its residents, its political subdivisions, agencies, and
32.11 instrumentalities must be attributed to this state, whether or
32.12 not the deposits are accepted or maintained by the taxpayer at
32.13 locations within this state.
32.14 (o) A financial institution's interest in property
32.15 described in section 290.015, subdivision 3, paragraph (b), is
32.16 included in the receipts factor in the same manner as assets in
32.17 the nature of securities or money market instruments are
32.18 included in paragraph (n).
32.19 (p) Receipts from leases, service contracts, or other
32.20 arrangements for tax-exempt property, as defined in and subject
32.21 to section 290.0711, are excluded from the receipts factor.
32.22 [EFFECTIVE DATE.] This section is effective for leases and
32.23 service contracts or similar arrangements entered into after
32.24 February 5, 2004, and for taxable years beginning after December
32.25 31, 2003.
32.26 Sec. 16. Minnesota Statutes 2002, section 290.191,
32.27 subdivision 10, is amended to read:
32.28 Subd. 10. [PROPERTY FACTOR; TANGIBLE PROPERTY.] (a)
32.29 Tangible property includes land, buildings, machinery and
32.30 equipment, inventories, and other tangible personal property
32.31 actually used by the taxpayer during the taxable year in
32.32 carrying on the business activities of the taxpayer. Tangible
32.33 property which is separately allocated under section 290.17 is
32.34 not includable in the property factor.
32.35 (b) Cash on hand or in banks, shares of stock, notes,
32.36 bonds, accounts receivable, or other evidences of indebtedness,
33.1 special privileges, franchises, and goodwill, are specifically
33.2 excluded from the property factor, except as otherwise provided
33.3 for financial institutions in subdivision 11.
33.4 (c) The value of tangible property that is owned by the
33.5 taxpayer and that is to be used in the apportionment fraction is
33.6 the original cost adjusted for any later capital additions or
33.7 improvements and partial disposition by reason of sale,
33.8 exchange, or abandonment.
33.9 (d) For purposes of computing the property factor, United
33.10 States government property that is used by the taxpayer must be
33.11 considered owned by the taxpayer.
33.12 (e) Property that is rented by the taxpayer is valued at
33.13 eight times the net annual rental. Net annual rental is the
33.14 annual rental paid by the taxpayer less any annual rental
33.15 received by the taxpayer from subrentals. If the subrents taken
33.16 into account in determining the net annual rental produce a
33.17 negative or clearly inaccurate value for any item of property,
33.18 another method that will properly reflect the value of rented
33.19 property may be required by the commissioner or requested by the
33.20 taxpayer. In no case, however, shall the value be less than an
33.21 amount which bears the same ratio to the annual rental paid by
33.22 the taxpayer for such property as the fair market value of that
33.23 portion of the property used by the taxpayer bears to the total
33.24 fair market value of the rented property. Rents paid during the
33.25 year cannot be averaged.
33.26 (f) A person filing a combined report shall use this method
33.27 of calculating the property factor for all members of the group.
33.28 (g) Tax-exempt property, as defined in and subject to
33.29 section 290.0711, is excluded from the property factor.
33.30 [EFFECTIVE DATE.] This section is effective for leases and
33.31 service contracts or similar arrangements entered into after
33.32 February 5, 2004, and for taxable years beginning after December
33.33 31, 2003.
33.34 Sec. 17. Minnesota Statutes 2002, section 290.191,
33.35 subdivision 11, is amended to read:
33.36 Subd. 11. [FINANCIAL INSTITUTIONS; PROPERTY FACTOR.] (a)
34.1 For financial institutions, the property factor includes, as
34.2 well as tangible property, intangible property as set forth in
34.3 this subdivision.
34.4 (b) Intangible personal property must be included at its
34.5 tax basis for federal income tax purposes.
34.6 (c) Goodwill must not be included in the property factor.
34.7 (d) Coin and currency located in this state must be
34.8 attributed to this state.
34.9 (e) Lease financing receivables must be attributed to this
34.10 state if and to the extent that the property is located within
34.11 this state.
34.12 (f) Assets in the nature of loans that are secured by real
34.13 or tangible personal property must be attributed to this state
34.14 if and to the extent that the security property is located
34.15 within this state.
34.16 (g) Assets in the nature of consumer loans and installment
34.17 obligations that are unsecured or secured by intangible property
34.18 must be attributed to this state if the loan was made to a
34.19 resident of this state.
34.20 (h) Assets in the nature of commercial loan and installment
34.21 obligations that are unsecured by real or tangible personal
34.22 property or secured by intangible property must be attributed to
34.23 this state if the proceeds of the loan are to be applied in this
34.24 state. If it cannot be determined where the funds are to be
34.25 applied, the assets must be attributed to the state in which
34.26 there is located the office of the borrower from which the
34.27 application would be made in the regular course of business. If
34.28 this cannot be determined, the transaction is disregarded in the
34.29 apportionment formula.
34.30 (i) A participating financial institution's portion of
34.31 participation and syndication loans must be attributed under
34.32 paragraphs (e) to (h).
34.33 (j) Financial institution credit card and travel and
34.34 entertainment credit card receivables must be attributed to the
34.35 state to which the credit card charges and fees are regularly
34.36 billed.
35.1 (k) Receivables arising from merchant discount income
35.2 derived from financial institution credit card holder
35.3 transactions with a merchant are attributed to the state in
35.4 which the merchant is located. In the case of merchants located
35.5 within and without the state, only receivables from merchant
35.6 discounts attributable to sales made from locations within the
35.7 state are attributed to this state. It is presumed, subject to
35.8 rebuttal, that the location of a merchant is the address shown
35.9 on the invoice submitted by the merchant to the taxpayer.
35.10 (l) Assets in the nature of securities and money market
35.11 instruments are apportioned to this state based upon the ratio
35.12 that total deposits from this state, its residents, its
35.13 political subdivisions, agencies and instrumentalities bear to
35.14 the total deposits from all states, their residents, their
35.15 political subdivisions, agencies and instrumentalities. In the
35.16 case of an unregulated financial institution, the assets are
35.17 apportioned to this state based upon the ratio that its gross
35.18 business income earned from sources within this state bears to
35.19 gross business income earned from sources within all states.
35.20 For purposes of this paragraph, deposits made by this state, its
35.21 residents, its political subdivisions, agencies, and
35.22 instrumentalities are attributed to this state, whether or not
35.23 the deposits are accepted or maintained by the taxpayer at
35.24 locations within this state.
35.25 (m) A financial institution's interest in any property
35.26 described in section 290.015, subdivision 3, paragraph (b), is
35.27 included in the property factor in the same manner as assets in
35.28 the nature of securities or money market instruments are
35.29 included under paragraph (1).
35.30 (n) Tax-exempt property, as defined in and subject to
35.31 section 290.0711, is excluded from the property factor.
35.32 [EFFECTIVE DATE.] This section is effective for leases and
35.33 service contracts or similar arrangements entered into after
35.34 February 5, 2004, and for taxable years beginning after December
35.35 31, 2003.
35.36 Sec. 18. Minnesota Statutes 2002, section 290.92,
36.1 subdivision 4b, is amended to read:
36.2 Subd. 4b. [WITHHOLDING BY PARTNERSHIPS.] (a) A partnership
36.3 shall deduct and withhold a tax as provided in paragraph (b) for
36.4 nonresident individual partners based on their distributive
36.5 shares of partnership income for a taxable year of the
36.6 partnership.
36.7 (b) The amount of tax withheld is determined by multiplying
36.8 the partner's distributive share allocable to Minnesota under
36.9 section 290.17, paid or credited during the taxable year by the
36.10 highest rate used to determine the income tax liability for an
36.11 individual under section 290.06, subdivision 2c, except that the
36.12 amount of tax withheld may be determined by the commissioner if
36.13 the partner submits a withholding exemption certificate under
36.14 subdivision 5.
36.15 (c) The commissioner may reduce or abate the tax withheld
36.16 under this subdivision if the partnership had reasonable cause
36.17 to believe that no tax was due under this section.
36.18 (d) Notwithstanding paragraph (a), a partnership is not
36.19 required to deduct and withhold tax for a nonresident partner if:
36.20 (1) the partner elects to have the tax due paid as part of
36.21 the partnership's composite return under section 289A.08,
36.22 subdivision 7;
36.23 (2) the partner has Minnesota assignable federal adjusted
36.24 gross income from the partnership of less than $1,000; or
36.25 (3) the partnership is liquidated or terminated, the income
36.26 was generated by a transaction related to the termination or
36.27 liquidation, and no cash or other property was distributed in
36.28 the current or prior taxable year; or
36.29 (4) the distributive shares of partnership income are
36.30 attributable to:
36.31 (i) income required to be recognized because of discharge
36.32 of indebtedness;
36.33 (ii) income recognized because of a sale, exchange, or
36.34 other disposition of real estate, depreciable property, or
36.35 property described in section 179 of the Internal Revenue Code;
36.36 or
37.1 (iii) income recognized on the sale, exchange, or other
37.2 disposition of any property that has been the subject of a basis
37.3 reduction pursuant to section 108, 734, 743, 754, or 1017 of the
37.4 Internal Revenue Code
37.5 to the extent that the income does not include cash received or
37.6 receivable or, if there is cash received or receivable, to the
37.7 extent that the cash is required to be used to pay indebtedness
37.8 by the partnership or a secured debt on partnership property; or
37.9 (5) the partnership is a publicly traded partnership, as
37.10 defined in section 7704(b) of the Internal Revenue Code.
37.11 (e) For purposes of subdivision 6a, and sections 289A.09,
37.12 subdivision 2, 289A.20, subdivision 2, paragraph (c), 289A.50,
37.13 289A.56, 289A.60, and 289A.63, a partnership is considered an
37.14 employer.
37.15 (f) To the extent that income is exempt from withholding
37.16 under paragraph (d), clause (4), the commissioner has a lien in
37.17 an amount up to the amount that would be required to be withheld
37.18 with respect to the income of the partner attributable to the
37.19 partnership interest, but for the application of paragraph (d),
37.20 clause (4). The lien arises under section 270.69 from the date
37.21 of assessment of the tax against the partner, and attaches to
37.22 that partner's share of the profits and any other money due or
37.23 to become due to that partner in respect of the partnership.
37.24 Notice of the lien may be sent by mail to the partnership,
37.25 without the necessity for recording the lien. The notice has
37.26 the force and effect of a levy under section 270.70, and is
37.27 enforceable against the partnership in the manner provided by
37.28 that section. Upon payment in full of the liability subsequent
37.29 to the notice of lien, the partnership must be notified that the
37.30 lien has been satisfied.
37.31 [EFFECTIVE DATE.] This section is effective for taxable
37.32 years beginning after December 31, 2003.
37.33 Sec. 19. Minnesota Statutes 2002, section 298.01,
37.34 subdivision 3, is amended to read:
37.35 Subd. 3. [OCCUPATION TAX; OTHER ORES.] Every person
37.36 engaged in the business of mining or producing ores in this
38.1 state, except iron ore or taconite concentrates, shall pay an
38.2 occupation tax to the state of Minnesota as provided in this
38.3 subdivision. The tax is determined in the same manner as the
38.4 tax imposed by section 290.02, except that sections 290.05,
38.5 subdivision 1, clause (a), and 290.17, subdivision 4, and
38.6 290.191, subdivision 2, do not apply. A person subject to
38.7 occupation tax under this section shall apportion its net income
38.8 on the basis of the percentage obtained by taking the sum of:
38.9 (1) 75 percent of the percentage which the sales made
38.10 within this state in connection with the trade or business
38.11 during the tax period are of the total sales wherever made in
38.12 connection with the trade or business during the tax period;
38.13 (2) 12.5 percent of the percentage which the total tangible
38.14 property used by the taxpayer in this state in connection with
38.15 the trade or business during the tax period is of the total
38.16 tangible property, wherever located, used by the taxpayer in
38.17 connection with the trade or business during the tax period; and
38.18 (3) 12.5 percent of the percentage which the taxpayer's
38.19 total payrolls paid or incurred in this state or paid in respect
38.20 to labor performed in this state in connection with the trade or
38.21 business during the tax period are of the taxpayer's total
38.22 payrolls paid or incurred in connection with the trade or
38.23 business during the tax period.
38.24 The tax is in addition to all other taxes.
38.25 [EFFECTIVE DATE.] This section is effective for tax years
38.26 beginning after December 31, 2004.
38.27 Sec. 20. Minnesota Statutes 2002, section 298.01,
38.28 subdivision 4, is amended to read:
38.29 Subd. 4. [OCCUPATION TAX; IRON ORE; TACONITE
38.30 CONCENTRATES.] A person engaged in the business of mining or
38.31 producing of iron ore, taconite concentrates or direct reduced
38.32 ore in this state shall pay an occupation tax to the state of
38.33 Minnesota. The tax is determined in the same manner as the tax
38.34 imposed by section 290.02, except that sections 290.05,
38.35 subdivision 1, clause (a), and 290.17, subdivision 4, and
38.36 290.191, subdivision 2, do not apply. A person subject to
39.1 occupation tax under this section shall apportion its net income
39.2 on the basis of the percentage obtained by taking the sum of:
39.3 (1) 75 percent of the percentage which the sales made
39.4 within this state in connection with the trade or business
39.5 during the tax period are of the total sales wherever made in
39.6 connection with the trade or business during the tax period;
39.7 (2) 12.5 percent of the percentage which the total tangible
39.8 property used by the taxpayer in this state in connection with
39.9 the trade or business during the tax period is of the total
39.10 tangible property, wherever located, used by the taxpayer in
39.11 connection with the trade or business during the tax period; and
39.12 (3) 12.5 percent of the percentage which the taxpayer's
39.13 total payrolls paid or incurred in this state or paid in respect
39.14 to labor performed in this state in connection with the trade or
39.15 business during the tax period are of the taxpayer's total
39.16 payrolls paid or incurred in connection with the trade or
39.17 business during the tax period.
39.18 The tax is in addition to all other taxes.
39.19 [EFFECTIVE DATE.] This section is effective for tax years
39.20 beginning after December 31, 2004.
39.21 Sec. 21. [REFUND PAYMENTS AUTHORIZED.]
39.22 The commissioner of revenue may allow a taxpayer to claim a
39.23 refund of Minnesota individual income tax paid on a distribution
39.24 from a qualified governmental pension plan, an individual
39.25 retirement account, a simplified employee pension, or a
39.26 qualified plan covering a self-employed person in a taxable year
39.27 beginning after December 31, 2001, and before January 1, 2004,
39.28 if the individual was unable to claim the subtraction under
39.29 Minnesota Statutes 1999 Supplement, section 290.01, subdivision
39.30 19b, clause (4), for taxable year 2000 or 2001 because the
39.31 individual was not a resident and had no Minnesota taxable
39.32 income. The amount of the refund equals the lesser of (1) the
39.33 tax on the distribution or (2) the marginal tax rate for the
39.34 taxpayer's tax year in which the distribution was received
39.35 multiplied by the subtraction under clause (4) that would have
39.36 been allowed if the taxpayer were a resident in tax year 2001.
40.1 The commissioner may process refunds under this section
40.2 separately from administration of the individual income tax in
40.3 the most efficient and lowest cost manner.
40.4 [EFFECTIVE DATE.] This section is effective the day
40.5 following final enactment.
40.6 ARTICLE 2
40.7 FEDERAL UPDATE
40.8 Section 1. Minnesota Statutes 2003 Supplement, section
40.9 289A.02, subdivision 7, is amended to read:
40.10 Subd. 7. [INTERNAL REVENUE CODE.] Unless specifically
40.11 defined otherwise, "Internal Revenue Code" means the Internal
40.12 Revenue Code of 1986, as amended through June 15, 2003 April 10,
40.13 2004.
40.14 [EFFECTIVE DATE.] This section is effective for actions
40.15 required on or after November 11, 2003.
40.16 Sec. 2. Minnesota Statutes 2003 Supplement, section
40.17 290.01, subdivision 19, is amended to read:
40.18 Subd. 19. [NET INCOME.] The term "net income" means the
40.19 federal taxable income, as defined in section 63 of the Internal
40.20 Revenue Code of 1986, as amended through the date named in this
40.21 subdivision, incorporating any elections made by the taxpayer in
40.22 accordance with the Internal Revenue Code in determining federal
40.23 taxable income for federal income tax purposes, and with the
40.24 modifications provided in subdivisions 19a to 19f.
40.25 In the case of a regulated investment company or a fund
40.26 thereof, as defined in section 851(a) or 851(g) of the Internal
40.27 Revenue Code, federal taxable income means investment company
40.28 taxable income as defined in section 852(b)(2) of the Internal
40.29 Revenue Code, except that:
40.30 (1) the exclusion of net capital gain provided in section
40.31 852(b)(2)(A) of the Internal Revenue Code does not apply;
40.32 (2) the deduction for dividends paid under section
40.33 852(b)(2)(D) of the Internal Revenue Code must be applied by
40.34 allowing a deduction for capital gain dividends and
40.35 exempt-interest dividends as defined in sections 852(b)(3)(C)
40.36 and 852(b)(5) of the Internal Revenue Code; and
41.1 (3) the deduction for dividends paid must also be applied
41.2 in the amount of any undistributed capital gains which the
41.3 regulated investment company elects to have treated as provided
41.4 in section 852(b)(3)(D) of the Internal Revenue Code.
41.5 The net income of a real estate investment trust as defined
41.6 and limited by section 856(a), (b), and (c) of the Internal
41.7 Revenue Code means the real estate investment trust taxable
41.8 income as defined in section 857(b)(2) of the Internal Revenue
41.9 Code.
41.10 The net income of a designated settlement fund as defined
41.11 in section 468B(d) of the Internal Revenue Code means the gross
41.12 income as defined in section 468B(b) of the Internal Revenue
41.13 Code.
41.14 The provisions of sections 1113(a), 1117, 1206(a), 1313(a),
41.15 1402(a), 1403(a), 1443, 1450, 1501(a), 1605, 1611(a), 1612,
41.16 1616, 1617, 1704(l), and 1704(m) of the Small Business Job
41.17 Protection Act, Public Law 104-188, the provisions of Public Law
41.18 104-117, the provisions of sections 313(a) and (b)(1), 602(a),
41.19 913(b), 941, 961, 971, 1001(a) and (b), 1002, 1003, 1012, 1013,
41.20 1014, 1061, 1062, 1081, 1084(b), 1086, 1087, 1111(a), 1131(b)
41.21 and (c), 1211(b), 1213, 1530(c)(2), 1601(f)(5) and (h), and
41.22 1604(d)(1) of the Taxpayer Relief Act of 1997, Public Law
41.23 105-34, the provisions of section 6010 of the Internal Revenue
41.24 Service Restructuring and Reform Act of 1998, Public Law
41.25 105-206, the provisions of section 4003 of the Omnibus
41.26 Consolidated and Emergency Supplemental Appropriations Act,
41.27 1999, Public Law 105-277, and the provisions of section 318 of
41.28 the Consolidated Appropriation Act of 2001, Public Law 106-554,
41.29 shall become effective at the time they become effective for
41.30 federal purposes.
41.31 The Internal Revenue Code of 1986, as amended through
41.32 December 31, 1996, shall be in effect for taxable years
41.33 beginning after December 31, 1996.
41.34 The provisions of sections 202(a) and (b), 221(a), 225,
41.35 312, 313, 913(a), 934, 962, 1004, 1005, 1052, 1063, 1084(a) and
41.36 (c), 1089, 1112, 1171, 1204, 1271(a) and (b), 1305(a), 1306,
42.1 1307, 1308, 1309, 1501(b), 1502(b), 1504(a), 1505, 1527, 1528,
42.2 1530, 1601(d), (e), (f), and (i) and 1602(a), (b), (c), and (e)
42.3 of the Taxpayer Relief Act of 1997, Public Law 105-34, the
42.4 provisions of sections 6004, 6005, 6012, 6013, 6015, 6016, 7002,
42.5 and 7003 of the Internal Revenue Service Restructuring and
42.6 Reform Act of 1998, Public Law 105-206, the provisions of
42.7 section 3001 of the Omnibus Consolidated and Emergency
42.8 Supplemental Appropriations Act, 1999, Public Law 105-277, the
42.9 provisions of section 3001 of the Miscellaneous Trade and
42.10 Technical Corrections Act of 1999, Public Law 106-36, and the
42.11 provisions of section 316 of the Consolidated Appropriation Act
42.12 of 2001, Public Law 106-554, and the provision of section 101 of
42.13 the Military Family Tax Relief Act of 2003, Public Law 108-121,
42.14 shall become effective at the time they become effective for
42.15 federal purposes.
42.16 The Internal Revenue Code of 1986, as amended through
42.17 December 31, 1997, shall be in effect for taxable years
42.18 beginning after December 31, 1997.
42.19 The provisions of sections 5002, 6009, 6011, and 7001 of
42.20 the Internal Revenue Service Restructuring and Reform Act of
42.21 1998, Public Law 105-206, the provisions of section 9010 of the
42.22 Transportation Equity Act for the 21st Century, Public Law
42.23 105-178, the provisions of sections 1004, 4002, and 5301 of the
42.24 Omnibus Consolidation and Emergency Supplemental Appropriations
42.25 Act, 1999, Public Law 105-277, the provision of section 303 of
42.26 the Ricky Ray Hemophilia Relief Fund Act of 1998, Public Law
42.27 105-369, the provisions of sections 532, 534, 536, 537, and 538
42.28 of the Ticket to Work and Work Incentives Improvement Act of
42.29 1999, Public Law 106-170, the provisions of the Installment Tax
42.30 Correction Act of 2000, Public Law 106-573, and the provisions
42.31 of section 309 of the Consolidated Appropriation Act of 2001,
42.32 Public Law 106-554, shall become effective at the time they
42.33 become effective for federal purposes.
42.34 The Internal Revenue Code of 1986, as amended through
42.35 December 31, 1998, shall be in effect for taxable years
42.36 beginning after December 31, 1998.
43.1 The provisions of the FSC Repeal and Extraterritorial
43.2 Income Exclusion Act of 2000, Public Law 106-519, and the
43.3 provision of section 412 of the Job Creation and Worker
43.4 Assistance Act of 2002, Public Law 107-147, shall become
43.5 effective at the time it became effective for federal purposes.
43.6 The Internal Revenue Code of 1986, as amended through
43.7 December 31, 1999, shall be in effect for taxable years
43.8 beginning after December 31, 1999. The provisions of sections
43.9 306 and 401 of the Consolidated Appropriation Act of 2001,
43.10 Public Law 106-554, and the provision of section 632(b)(2)(A) of
43.11 the Economic Growth and Tax Relief Reconciliation Act of 2001,
43.12 Public Law 107-16, and provisions of sections 101 and 402 of the
43.13 Job Creation and Worker Assistance Act of 2002, Public Law
43.14 107-147, shall become effective at the same time it became
43.15 effective for federal purposes.
43.16 The Internal Revenue Code of 1986, as amended through
43.17 December 31, 2000, shall be in effect for taxable years
43.18 beginning after December 31, 2000. The provisions of sections
43.19 659a and 671 of the Economic Growth and Tax Relief
43.20 Reconciliation Act of 2001, Public Law 107-16, the provisions of
43.21 sections 104, 105, and 111 of the Victims of Terrorism Tax
43.22 Relief Act of 2001, Public Law 107-134, and the provisions of
43.23 sections 201, 403, 413, and 606 of the Job Creation and Worker
43.24 Assistance Act of 2002, Public Law 107-147, and the provision of
43.25 section 102 of the Military Family Tax Relief Act of 2003,
43.26 Public Law 108-121, shall become effective at the same time it
43.27 became effective for federal purposes.
43.28 The Internal Revenue Code of 1986, as amended through March
43.29 15, 2002, shall be in effect for taxable years beginning after
43.30 December 31, 2001.
43.31 The provisions of sections 101 and 102 of the Victims of
43.32 Terrorism Tax Relief Act of 2001, Public Law 107-134, shall
43.33 become effective at the same time it becomes effective for
43.34 federal purposes.
43.35 The Internal Revenue Code of 1986, as amended through June
43.36 15, 2003, shall be in effect for taxable years beginning after
44.1 December 31, 2002. The provisions of section 201 of the Jobs
44.2 and Growth Tax Relief and Reconciliation Act of 2003, H.R. 2, if
44.3 it is enacted into law Public Law 108-27, and the provisions of
44.4 sections 103, 106, 108, 109, and 110 of the Military Family Tax
44.5 Relief Act of 2003, Public Law 108-121, are effective at the
44.6 same time it became effective for federal purposes.
44.7 The Internal Revenue Code of 1986, as amended through April
44.8 10, 2004, shall be in effect for taxable years beginning after
44.9 December 31, 2003.
44.10 Except as otherwise provided, references to the Internal
44.11 Revenue Code in subdivisions 19a to 19g mean the code in effect
44.12 for purposes of determining net income for the applicable year.
44.13 [EFFECTIVE DATE.] This section is effective the day
44.14 following final enactment.
44.15 Sec. 3. Minnesota Statutes 2003 Supplement, section
44.16 290.01, subdivision 19a, is amended to read:
44.17 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For
44.18 individuals, estates, and trusts, there shall be added to
44.19 federal taxable income:
44.20 (1)(i) interest income on obligations of any state other
44.21 than Minnesota or a political or governmental subdivision,
44.22 municipality, or governmental agency or instrumentality of any
44.23 state other than Minnesota exempt from federal income taxes
44.24 under the Internal Revenue Code or any other federal statute;
44.25 and
44.26 (ii) exempt-interest dividends as defined in section
44.27 852(b)(5) of the Internal Revenue Code, except the portion of
44.28 the exempt-interest dividends derived from interest income on
44.29 obligations of the state of Minnesota or its political or
44.30 governmental subdivisions, municipalities, governmental agencies
44.31 or instrumentalities, but only if the portion of the
44.32 exempt-interest dividends from such Minnesota sources paid to
44.33 all shareholders represents 95 percent or more of the
44.34 exempt-interest dividends that are paid by the regulated
44.35 investment company as defined in section 851(a) of the Internal
44.36 Revenue Code, or the fund of the regulated investment company as
45.1 defined in section 851(g) of the Internal Revenue Code, making
45.2 the payment; and
45.3 (iii) for the purposes of items (i) and (ii), interest on
45.4 obligations of an Indian tribal government described in section
45.5 7871(c) of the Internal Revenue Code shall be treated as
45.6 interest income on obligations of the state in which the tribe
45.7 is located;
45.8 (2) the amount of income taxes paid or accrued within the
45.9 taxable year under this chapter and income taxes paid to any
45.10 other state or to any province or territory of Canada, to the
45.11 extent allowed as a deduction under section 63(d) of the
45.12 Internal Revenue Code, but the addition may not be more than the
45.13 amount by which the itemized deductions as allowed under section
45.14 63(d) of the Internal Revenue Code exceeds the amount of the
45.15 standard deduction as defined in section 63(c) of the Internal
45.16 Revenue Code. For the purpose of this paragraph, the
45.17 disallowance of itemized deductions under section 68 of the
45.18 Internal Revenue Code of 1986, income tax is the last itemized
45.19 deduction disallowed;
45.20 (3) the capital gain amount of a lump sum distribution to
45.21 which the special tax under section 1122(h)(3)(B)(ii) of the Tax
45.22 Reform Act of 1986, Public Law 99-514, applies;
45.23 (4) the amount of income taxes paid or accrued within the
45.24 taxable year under this chapter and income taxes paid to any
45.25 other state or any province or territory of Canada, to the
45.26 extent allowed as a deduction in determining federal adjusted
45.27 gross income. For the purpose of this paragraph, income taxes
45.28 do not include the taxes imposed by sections 290.0922,
45.29 subdivision 1, paragraph (b), 290.9727, 290.9728, and 290.9729;
45.30 (5) the amount of expense, interest, or taxes disallowed
45.31 pursuant to section 290.10;
45.32 (6) the amount of a partner's pro rata share of net income
45.33 which does not flow through to the partner because the
45.34 partnership elected to pay the tax on the income under section
45.35 6242(a)(2) of the Internal Revenue Code; and
45.36 (7) 80 percent of the depreciation deduction allowed under
46.1 section 168(k) of the Internal Revenue Code. For purposes of
46.2 this clause, if the taxpayer has an activity that in the taxable
46.3 year generates a deduction for depreciation under section 168(k)
46.4 and the activity generates a loss for the taxable year that the
46.5 taxpayer is not allowed to claim for the taxable year, "the
46.6 depreciation allowed under section 168(k)" for the taxable year
46.7 is limited to excess of the depreciation claimed by the activity
46.8 under section 168(k) over the amount of the loss from the
46.9 activity that is not allowed in the taxable year. In succeeding
46.10 taxable years when the losses not allowed in the taxable year
46.11 are allowed, the depreciation under section 168(k) is allowed;
46.12 and
46.13 (8) the exclusion allowed under section 139A of the
46.14 Internal Revenue Code for federal subsidies for prescription
46.15 drug plans.
46.16 [EFFECTIVE DATE.] This section is effective for taxable
46.17 years beginning after December 31, 2003.
46.18 Sec. 4. Minnesota Statutes 2003 Supplement, section
46.19 290.01, subdivision 19b, is amended to read:
46.20 Subd. 19b. [SUBTRACTIONS FROM FEDERAL TAXABLE INCOME.] For
46.21 individuals, estates, and trusts, there shall be subtracted from
46.22 federal taxable income:
46.23 (1) interest income on obligations of any authority,
46.24 commission, or instrumentality of the United States to the
46.25 extent includable in taxable income for federal income tax
46.26 purposes but exempt from state income tax under the laws of the
46.27 United States;
46.28 (2) if included in federal taxable income, the amount of
46.29 any overpayment of income tax to Minnesota or to any other
46.30 state, for any previous taxable year, whether the amount is
46.31 received as a refund or as a credit to another taxable year's
46.32 income tax liability;
46.33 (3) the amount paid to others, less the amount used to
46.34 claim the credit allowed under section 290.0674, not to exceed
46.35 $1,625 for each qualifying child in grades kindergarten to 6 and
46.36 $2,500 for each qualifying child in grades 7 to 12, for tuition,
47.1 textbooks, and transportation of each qualifying child in
47.2 attending an elementary or secondary school situated in
47.3 Minnesota, North Dakota, South Dakota, Iowa, or Wisconsin,
47.4 wherein a resident of this state may legally fulfill the state's
47.5 compulsory attendance laws, which is not operated for profit,
47.6 and which adheres to the provisions of the Civil Rights Act of
47.7 1964 and chapter 363A. For the purposes of this clause,
47.8 "tuition" includes fees or tuition as defined in section
47.9 290.0674, subdivision 1, clause (1). As used in this clause,
47.10 "textbooks" includes books and other instructional materials and
47.11 equipment purchased or leased for use in elementary and
47.12 secondary schools in teaching only those subjects legally and
47.13 commonly taught in public elementary and secondary schools in
47.14 this state. Equipment expenses qualifying for deduction
47.15 includes expenses as defined and limited in section 290.0674,
47.16 subdivision 1, clause (3). "Textbooks" does not include
47.17 instructional books and materials used in the teaching of
47.18 religious tenets, doctrines, or worship, the purpose of which is
47.19 to instill such tenets, doctrines, or worship, nor does it
47.20 include books or materials for, or transportation to,
47.21 extracurricular activities including sporting events, musical or
47.22 dramatic events, speech activities, driver's education, or
47.23 similar programs. For purposes of the subtraction provided by
47.24 this clause, "qualifying child" has the meaning given in section
47.25 32(c)(3) of the Internal Revenue Code;
47.26 (4) income as provided under section 290.0802;
47.27 (5) to the extent included in federal adjusted gross
47.28 income, income realized on disposition of property exempt from
47.29 tax under section 290.491;
47.30 (6) to the extent included in federal taxable income,
47.31 postservice benefits for youth community service under section
47.32 124D.42 for volunteer service under United States Code, title
47.33 42, sections 12601 to 12604;
47.34 (7) to the extent not deducted in determining federal
47.35 taxable income by an individual who does not itemize deductions
47.36 for federal income tax purposes for the taxable year, an amount
48.1 equal to 50 percent of the excess of charitable contributions
48.2 allowable as a deduction for the taxable year under section
48.3 170(a) of the Internal Revenue Code over $500;
48.4 (8) for taxable years beginning before January 1, 2008, the
48.5 amount of the federal small ethanol producer credit allowed
48.6 under section 40(a)(3) of the Internal Revenue Code which is
48.7 included in gross income under section 87 of the Internal
48.8 Revenue Code;
48.9 (9) for individuals who are allowed a federal foreign tax
48.10 credit for taxes that do not qualify for a credit under section
48.11 290.06, subdivision 22, an amount equal to the carryover of
48.12 subnational foreign taxes for the taxable year, but not to
48.13 exceed the total subnational foreign taxes reported in claiming
48.14 the foreign tax credit. For purposes of this clause, "federal
48.15 foreign tax credit" means the credit allowed under section 27 of
48.16 the Internal Revenue Code, and "carryover of subnational foreign
48.17 taxes" equals the carryover allowed under section 904(c) of the
48.18 Internal Revenue Code minus national level foreign taxes to the
48.19 extent they exceed the federal foreign tax credit;
48.20 (10) in each of the five tax years immediately following
48.21 the tax year in which an addition is required under subdivision
48.22 19a, clause (7), an amount equal to one-fifth of the delayed
48.23 depreciation. For purposes of this clause, "delayed
48.24 depreciation" means the amount of the addition made by the
48.25 taxpayer under subdivision 19a, clause (7), minus the positive
48.26 value of any net operating loss under section 172 of the
48.27 Internal Revenue Code generated for the tax year of the
48.28 addition. The resulting delayed depreciation cannot be less
48.29 than zero; and
48.30 (11) job opportunity building zone income as provided under
48.31 section 469.316; and
48.32 (12) to the extent included in federal taxable income,
48.33 compensation paid to a service member as defined in United
48.34 States Code, title 10, section 101(a)(5), for military service
48.35 as defined in the Service Members Civil Relief Act, Public Law
48.36 108-189, section 101(2), performed by a nonresident. This
49.1 subtraction does not apply to "retirement income" as defined in
49.2 section 290.17, subdivision 2, paragraph (a), clause (3).
49.3 [EFFECTIVE DATE.] This section is effective for tax years
49.4 beginning after December 31, 2002.
49.5 Sec. 5. Minnesota Statutes 2003 Supplement, section
49.6 290.01, subdivision 19c, is amended to read:
49.7 Subd. 19c. [CORPORATIONS; ADDITIONS TO FEDERAL TAXABLE
49.8 INCOME.] For corporations, there shall be added to federal
49.9 taxable income:
49.10 (1) the amount of any deduction taken for federal income
49.11 tax purposes for income, excise, or franchise taxes based on net
49.12 income or related minimum taxes, including but not limited to
49.13 the tax imposed under section 290.0922, paid by the corporation
49.14 to Minnesota, another state, a political subdivision of another
49.15 state, the District of Columbia, or any foreign country or
49.16 possession of the United States;
49.17 (2) interest not subject to federal tax upon obligations
49.18 of: the United States, its possessions, its agencies, or its
49.19 instrumentalities; the state of Minnesota or any other state,
49.20 any of its political or governmental subdivisions, any of its
49.21 municipalities, or any of its governmental agencies or
49.22 instrumentalities; the District of Columbia; or Indian tribal
49.23 governments;
49.24 (3) exempt-interest dividends received as defined in
49.25 section 852(b)(5) of the Internal Revenue Code;
49.26 (4) the amount of any net operating loss deduction taken
49.27 for federal income tax purposes under section 172 or 832(c)(10)
49.28 of the Internal Revenue Code or operations loss deduction under
49.29 section 810 of the Internal Revenue Code;
49.30 (5) the amount of any special deductions taken for federal
49.31 income tax purposes under sections 241 to 247 of the Internal
49.32 Revenue Code;
49.33 (6) losses from the business of mining, as defined in
49.34 section 290.05, subdivision 1, clause (a), that are not subject
49.35 to Minnesota income tax;
49.36 (7) the amount of any capital losses deducted for federal
50.1 income tax purposes under sections 1211 and 1212 of the Internal
50.2 Revenue Code;
50.3 (8) the exempt foreign trade income of a foreign sales
50.4 corporation under sections 921(a) and 291 of the Internal
50.5 Revenue Code;
50.6 (9) the amount of percentage depletion deducted under
50.7 sections 611 through 614 and 291 of the Internal Revenue Code;
50.8 (10) for certified pollution control facilities placed in
50.9 service in a taxable year beginning before December 31, 1986,
50.10 and for which amortization deductions were elected under section
50.11 169 of the Internal Revenue Code of 1954, as amended through
50.12 December 31, 1985, the amount of the amortization deduction
50.13 allowed in computing federal taxable income for those
50.14 facilities;
50.15 (11) the amount of any deemed dividend from a foreign
50.16 operating corporation determined pursuant to section 290.17,
50.17 subdivision 4, paragraph (g);
50.18 (12) the amount of any environmental tax paid under section
50.19 59(a) of the Internal Revenue Code;
50.20 (13) the amount of a partner's pro rata share of net income
50.21 which does not flow through to the partner because the
50.22 partnership elected to pay the tax on the income under section
50.23 6242(a)(2) of the Internal Revenue Code;
50.24 (14) the amount of net income excluded under section 114 of
50.25 the Internal Revenue Code;
50.26 (15) any increase in subpart F income, as defined in
50.27 section 952(a) of the Internal Revenue Code, for the taxable
50.28 year when subpart F income is calculated without regard to the
50.29 provisions of section 614 of Public Law 107-147; and
50.30 (16) 80 percent of the depreciation deduction allowed under
50.31 section 168(k) of the Internal Revenue Code. For purposes of
50.32 this clause, if the taxpayer has an activity that in the taxable
50.33 year generates a deduction for depreciation under section 168(k)
50.34 and the activity generates a loss for the taxable year that the
50.35 taxpayer is not allowed to claim for the taxable year, "the
50.36 depreciation allowed under section 168(k)" for the taxable year
51.1 is limited to excess of the depreciation claimed by the activity
51.2 under section 168(k) over the amount of the loss from the
51.3 activity that is not allowed in the taxable year. In succeeding
51.4 taxable years when the losses not allowed in the taxable year
51.5 are allowed, the depreciation under section 168(k) is allowed;
51.6 and
51.7 (17) the exclusion allowed under section 139A of the
51.8 Internal Revenue Code for federal subsidies for prescription
51.9 drug plans.
51.10 [EFFECTIVE DATE.] This section is effective for taxable
51.11 years beginning after December 31, 2003.
51.12 Sec. 6. Minnesota Statutes 2003 Supplement, section
51.13 290.01, subdivision 31, is amended to read:
51.14 Subd. 31. [INTERNAL REVENUE CODE.] Unless specifically
51.15 defined otherwise, "Internal Revenue Code" means the Internal
51.16 Revenue Code of 1986, as amended through June 15, 2003 April 10,
51.17 2004.
51.18 [EFFECTIVE DATE.] This section is effective the day
51.19 following final enactment except the changes incorporated by
51.20 federal changes are effective at the same times as the changes
51.21 were effective for federal purposes.
51.22 Sec. 7. Minnesota Statutes 2003 Supplement, section
51.23 290.06, subdivision 2c, is amended to read:
51.24 Subd. 2c. [SCHEDULES OF RATES FOR INDIVIDUALS, ESTATES,
51.25 AND TRUSTS.] (a) The income taxes imposed by this chapter upon
51.26 married individuals filing joint returns and surviving spouses
51.27 as defined in section 2(a) of the Internal Revenue Code must be
51.28 computed by applying to their taxable net income the following
51.29 schedule of rates:
51.30 (1) On the first $25,680, 5.35 percent;
51.31 (2) On all over $25,680, but not over $102,030, 7.05
51.32 percent;
51.33 (3) On all over $102,030, 7.85 percent.
51.34 Married individuals filing separate returns, estates, and
51.35 trusts must compute their income tax by applying the above rates
51.36 to their taxable income, except that the income brackets will be
52.1 one-half of the above amounts.
52.2 (b) The income taxes imposed by this chapter upon unmarried
52.3 individuals must be computed by applying to taxable net income
52.4 the following schedule of rates:
52.5 (1) On the first $17,570, 5.35 percent;
52.6 (2) On all over $17,570, but not over $57,710, 7.05
52.7 percent;
52.8 (3) On all over $57,710, 7.85 percent.
52.9 (c) The income taxes imposed by this chapter upon unmarried
52.10 individuals qualifying as a head of household as defined in
52.11 section 2(b) of the Internal Revenue Code must be computed by
52.12 applying to taxable net income the following schedule of rates:
52.13 (1) On the first $21,630, 5.35 percent;
52.14 (2) On all over $21,630, but not over $86,910, 7.05
52.15 percent;
52.16 (3) On all over $86,910, 7.85 percent.
52.17 (d) In lieu of a tax computed according to the rates set
52.18 forth in this subdivision, the tax of any individual taxpayer
52.19 whose taxable net income for the taxable year is less than an
52.20 amount determined by the commissioner must be computed in
52.21 accordance with tables prepared and issued by the commissioner
52.22 of revenue based on income brackets of not more than $100. The
52.23 amount of tax for each bracket shall be computed at the rates
52.24 set forth in this subdivision, provided that the commissioner
52.25 may disregard a fractional part of a dollar unless it amounts to
52.26 50 cents or more, in which case it may be increased to $1.
52.27 (e) An individual who is not a Minnesota resident for the
52.28 entire year must compute the individual's Minnesota income tax
52.29 as provided in this subdivision. After the application of the
52.30 nonrefundable credits provided in this chapter, the tax
52.31 liability must then be multiplied by a fraction in which:
52.32 (1) the numerator is the individual's Minnesota source
52.33 federal adjusted gross income as defined in section 62 of the
52.34 Internal Revenue Code and increased by the additions required
52.35 under section 290.01, subdivision 19a, clauses (1), (5), and
52.36 (6), and reduced by the subtraction subtractions under section
53.1 290.01, subdivision 19b, clause clauses (11) and (12), and the
53.2 Minnesota assignable portion of the subtraction for United
53.3 States government interest under section 290.01, subdivision
53.4 19b, clause (1), after applying the allocation and assignability
53.5 provisions of section 290.081, clause (a), or 290.17; and
53.6 (2) the denominator is the individual's federal adjusted
53.7 gross income as defined in section 62 of the Internal Revenue
53.8 Code of 1986, increased by the amounts specified in section
53.9 290.01, subdivision 19a, clauses (1), (5), and (6), and reduced
53.10 by the amounts specified in section 290.01, subdivision 19b,
53.11 clauses (1) and, (11), and (12).
53.12 [EFFECTIVE DATE.] This section is effective for taxable
53.13 years beginning after December 31, 2002.
53.14 Sec. 8. Minnesota Statutes 2003 Supplement, section
53.15 290.091, subdivision 2, is amended to read:
53.16 Subd. 2. [DEFINITIONS.] For purposes of the tax imposed by
53.17 this section, the following terms have the meanings given:
53.18 (a) "Alternative minimum taxable income" means the sum of
53.19 the following for the taxable year:
53.20 (1) the taxpayer's federal alternative minimum taxable
53.21 income as defined in section 55(b)(2) of the Internal Revenue
53.22 Code;
53.23 (2) the taxpayer's itemized deductions allowed in computing
53.24 federal alternative minimum taxable income, but excluding:
53.25 (i) the charitable contribution deduction under section 170
53.26 of the Internal Revenue Code to the extent that the deduction
53.27 exceeds 1.0 percent of adjusted gross income, as defined in
53.28 section 62 of the Internal Revenue Code;
53.29 (ii) the medical expense deduction;
53.30 (iii) the casualty, theft, and disaster loss deduction; and
53.31 (iv) the impairment-related work expenses of a disabled
53.32 person;
53.33 (3) for depletion allowances computed under section 613A(c)
53.34 of the Internal Revenue Code, with respect to each property (as
53.35 defined in section 614 of the Internal Revenue Code), to the
53.36 extent not included in federal alternative minimum taxable
54.1 income, the excess of the deduction for depletion allowable
54.2 under section 611 of the Internal Revenue Code for the taxable
54.3 year over the adjusted basis of the property at the end of the
54.4 taxable year (determined without regard to the depletion
54.5 deduction for the taxable year);
54.6 (4) to the extent not included in federal alternative
54.7 minimum taxable income, the amount of the tax preference for
54.8 intangible drilling cost under section 57(a)(2) of the Internal
54.9 Revenue Code determined without regard to subparagraph (E);
54.10 (5) to the extent not included in federal alternative
54.11 minimum taxable income, the amount of interest income as
54.12 provided by section 290.01, subdivision 19a, clause (1); and
54.13 (6) the amount of addition required by section 290.01,
54.14 subdivision 19a, clause (7); and
54.15 (7) the amount of addition required by section 290.01,
54.16 subdivision 19a, clause (8);
54.17 less the sum of the amounts determined under the following:
54.18 (1) interest income as defined in section 290.01,
54.19 subdivision 19b, clause (1);
54.20 (2) an overpayment of state income tax as provided by
54.21 section 290.01, subdivision 19b, clause (2), to the extent
54.22 included in federal alternative minimum taxable income;
54.23 (3) the amount of investment interest paid or accrued
54.24 within the taxable year on indebtedness to the extent that the
54.25 amount does not exceed net investment income, as defined in
54.26 section 163(d)(4) of the Internal Revenue Code. Interest does
54.27 not include amounts deducted in computing federal adjusted gross
54.28 income; and
54.29 (4) amounts subtracted from federal taxable income as
54.30 provided by section 290.01, subdivision 19b, clauses (10) and
54.31 (11) to (12).
54.32 In the case of an estate or trust, alternative minimum
54.33 taxable income must be computed as provided in section 59(c) of
54.34 the Internal Revenue Code.
54.35 (b) "Investment interest" means investment interest as
54.36 defined in section 163(d)(3) of the Internal Revenue Code.
55.1 (c) "Tentative minimum tax" equals 6.4 percent of
55.2 alternative minimum taxable income after subtracting the
55.3 exemption amount determined under subdivision 3.
55.4 (d) "Regular tax" means the tax that would be imposed under
55.5 this chapter (without regard to this section and section
55.6 290.032), reduced by the sum of the nonrefundable credits
55.7 allowed under this chapter.
55.8 (e) "Net minimum tax" means the minimum tax imposed by this
55.9 section.
55.10 [EFFECTIVE DATE.] This section is effective for taxable
55.11 years beginning after December 31, 2003.
55.12 Sec. 9. Minnesota Statutes 2003 Supplement, section
55.13 290.0921, subdivision 3, is amended to read:
55.14 Subd. 3. [ALTERNATIVE MINIMUM TAXABLE INCOME.]
55.15 "Alternative minimum taxable income" is Minnesota net income as
55.16 defined in section 290.01, subdivision 19, and includes the
55.17 adjustments and tax preference items in sections 56, 57, 58, and
55.18 59(d), (e), (f), and (h) of the Internal Revenue Code. If a
55.19 corporation files a separate company Minnesota tax return, the
55.20 minimum tax must be computed on a separate company basis. If a
55.21 corporation is part of a tax group filing a unitary return, the
55.22 minimum tax must be computed on a unitary basis. The following
55.23 adjustments must be made.
55.24 (1) For purposes of the depreciation adjustments under
55.25 section 56(a)(1) and 56(g)(4)(A) of the Internal Revenue Code,
55.26 the basis for depreciable property placed in service in a
55.27 taxable year beginning before January 1, 1990, is the adjusted
55.28 basis for federal income tax purposes, including any
55.29 modification made in a taxable year under section 290.01,
55.30 subdivision 19e, or Minnesota Statutes 1986, section 290.09,
55.31 subdivision 7, paragraph (c).
55.32 For taxable years beginning after December 31, 2000, the
55.33 amount of any remaining modification made under section 290.01,
55.34 subdivision 19e, or Minnesota Statutes 1986, section 290.09,
55.35 subdivision 7, paragraph (c), not previously deducted is a
55.36 depreciation allowance in the first taxable year after December
56.1 31, 2000.
56.2 (2) The portion of the depreciation deduction allowed for
56.3 federal income tax purposes under section 168(k) of the Internal
56.4 Revenue Code that is required as an addition under section
56.5 290.01, subdivision 19c, clause (16), is disallowed in
56.6 determining alternative minimum taxable income.
56.7 (3) The subtraction for depreciation allowed under section
56.8 290.01, subdivision 19d, clause (19), is allowed as a
56.9 depreciation deduction in determining alternative minimum
56.10 taxable income.
56.11 (4) The alternative tax net operating loss deduction under
56.12 sections 56(a)(4) and 56(d) of the Internal Revenue Code does
56.13 not apply.
56.14 (5) The special rule for certain dividends under section
56.15 56(g)(4)(C)(ii) of the Internal Revenue Code does not apply.
56.16 (6) The special rule for dividends from section 936
56.17 companies under section 56(g)(4)(C)(iii) does not apply.
56.18 (7) The tax preference for depletion under section 57(a)(1)
56.19 of the Internal Revenue Code does not apply.
56.20 (8) The tax preference for intangible drilling costs under
56.21 section 57(a)(2) of the Internal Revenue Code must be calculated
56.22 without regard to subparagraph (E) and the subtraction under
56.23 section 290.01, subdivision 19d, clause (4).
56.24 (9) The tax preference for tax exempt interest under
56.25 section 57(a)(5) of the Internal Revenue Code does not apply.
56.26 (10) The tax preference for charitable contributions of
56.27 appreciated property under section 57(a)(6) of the Internal
56.28 Revenue Code does not apply.
56.29 (11) For purposes of calculating the tax preference for
56.30 accelerated depreciation or amortization on certain property
56.31 placed in service before January 1, 1987, under section 57(a)(7)
56.32 of the Internal Revenue Code, the deduction allowable for the
56.33 taxable year is the deduction allowed under section 290.01,
56.34 subdivision 19e.
56.35 For taxable years beginning after December 31, 2000, the
56.36 amount of any remaining modification made under section 290.01,
57.1 subdivision 19e, not previously deducted is a depreciation or
57.2 amortization allowance in the first taxable year after December
57.3 31, 2004.
57.4 (12) For purposes of calculating the adjustment for
57.5 adjusted current earnings in section 56(g) of the Internal
57.6 Revenue Code, the term "alternative minimum taxable income" as
57.7 it is used in section 56(g) of the Internal Revenue Code, means
57.8 alternative minimum taxable income as defined in this
57.9 subdivision, determined without regard to the adjustment for
57.10 adjusted current earnings in section 56(g) of the Internal
57.11 Revenue Code.
57.12 (13) For purposes of determining the amount of adjusted
57.13 current earnings under section 56(g)(3) of the Internal Revenue
57.14 Code, no adjustment shall be made under section 56(g)(4) of the
57.15 Internal Revenue Code with respect to (i) the amount of foreign
57.16 dividend gross-up subtracted as provided in section 290.01,
57.17 subdivision 19d, clause (1), (ii) the amount of refunds of
57.18 income, excise, or franchise taxes subtracted as provided in
57.19 section 290.01, subdivision 19d, clause (10), or (iii) the
57.20 amount of royalties, fees or other like income subtracted as
57.21 provided in section 290.01, subdivision 19d, clause (11).
57.22 (14) Alternative minimum taxable income excludes the income
57.23 from operating in a job opportunity building zone as provided
57.24 under section 469.317.
57.25 (15) Alternative minimum taxable income excludes the income
57.26 from operating in a biotechnology and health sciences industry
57.27 zone as provided under section 469.337.
57.28 (16) The addition required under section 290.01,
57.29 subdivision 19c, clause (17), is included in determining
57.30 alternative minimum taxable income.
57.31 Items of tax preference must not be reduced below zero as a
57.32 result of the modifications in this subdivision.
57.33 [EFFECTIVE DATE.] This section is effective for taxable
57.34 years beginning after December 31, 2003.
57.35 Sec. 10. Minnesota Statutes 2003 Supplement, section
57.36 290A.03, subdivision 15, is amended to read:
58.1 Subd. 15. [INTERNAL REVENUE CODE.] "Internal Revenue Code"
58.2 means the Internal Revenue Code of 1986, as amended through June
58.3 15, 2003 April 10, 2004.
58.4 [EFFECTIVE DATE.] This section is effective the day
58.5 following final enactment except the changes to household income
58.6 generated by federal changes to federal adjusted gross income
58.7 are effective at the same time federal changes are effective.
58.8 Sec. 11. Minnesota Statutes 2003 Supplement, section
58.9 291.005, subdivision 1, is amended to read:
58.10 Subdivision 1. Unless the context otherwise clearly
58.11 requires, the following terms used in this chapter shall have
58.12 the following meanings:
58.13 (1) "Federal gross estate" means the gross estate of a
58.14 decedent as valued and otherwise determined for federal estate
58.15 tax purposes by federal taxing authorities pursuant to the
58.16 provisions of the Internal Revenue Code.
58.17 (2) "Minnesota gross estate" means the federal gross estate
58.18 of a decedent after (a) excluding therefrom any property
58.19 included therein which has its situs outside Minnesota, and (b)
58.20 including therein any property omitted from the federal gross
58.21 estate which is includable therein, has its situs in Minnesota,
58.22 and was not disclosed to federal taxing authorities.
58.23 (3) "Personal representative" means the executor,
58.24 administrator or other person appointed by the court to
58.25 administer and dispose of the property of the decedent. If
58.26 there is no executor, administrator or other person appointed,
58.27 qualified, and acting within this state, then any person in
58.28 actual or constructive possession of any property having a situs
58.29 in this state which is included in the federal gross estate of
58.30 the decedent shall be deemed to be a personal representative to
58.31 the extent of the property and the Minnesota estate tax due with
58.32 respect to the property.
58.33 (4) "Resident decedent" means an individual whose domicile
58.34 at the time of death was in Minnesota.
58.35 (5) "Nonresident decedent" means an individual whose
58.36 domicile at the time of death was not in Minnesota.
59.1 (6) "Situs of property" means, with respect to real
59.2 property, the state or country in which it is located; with
59.3 respect to tangible personal property, the state or country in
59.4 which it was normally kept or located at the time of the
59.5 decedent's death; and with respect to intangible personal
59.6 property, the state or country in which the decedent was
59.7 domiciled at death.
59.8 (7) "Commissioner" means the commissioner of revenue or any
59.9 person to whom the commissioner has delegated functions under
59.10 this chapter.
59.11 (8) "Internal Revenue Code" means the United States
59.12 Internal Revenue Code of 1986, as amended through December 31,
59.13 2002 2003.
59.14 [EFFECTIVE DATE.] This section is effective for estates of
59.15 decedents dying after January 31, 2003.
59.16 ARTICLE 3
59.17 PROPERTY TAXES
59.18 Section 1. Minnesota Statutes 2002, section 97A.061,
59.19 subdivision 1, is amended to read:
59.20 Subdivision 1. [APPLICABILITY; AMOUNT.] (a) The
59.21 commissioner shall annually make a payment to each county having
59.22 public hunting areas and game refuges. Money to make the
59.23 payments is annually appropriated for that purpose from the
59.24 general fund. Except as provided in paragraph (b), this section
59.25 does not apply to state trust fund land and other state land not
59.26 purchased for game refuge or public hunting purposes. Except as
59.27 provided in paragraph (b), the payment shall be the greatest of:
59.28 (1) 35 percent of the gross receipts from all special use
59.29 permits and leases of land acquired for public hunting and game
59.30 refuges;
59.31 (2) 50 cents per acre on land purchased actually used for
59.32 public hunting or game refuges; or
59.33 (3) three-fourths of one percent of the appraised value of
59.34 purchased land actually used for public hunting and game refuges.
59.35 (b) The payment shall be 50 percent of the dollar amount
59.36 adjusted for inflation as determined under section 477A.12,
60.1 subdivision 1, paragraph (a), clause (1), multiplied by the
60.2 number of acres of land in the county that are owned by another
60.3 state agency for military purposes and designated as a game
60.4 refuge under section 97A.085.
60.5 (c) The payment must be reduced by the amount paid under
60.6 subdivision 3 for croplands managed for wild geese.
60.7 (c) (d) The appraised value is the purchase price for five
60.8 years after acquisition. The appraised value shall be
60.9 determined by the county assessor every five years after
60.10 acquisition.
60.11 [EFFECTIVE DATE.] This section is effective for aids paid
60.12 in calendar year 2005 and thereafter.
60.13 Sec. 2. Minnesota Statutes 2002, section 144F.01,
60.14 subdivision 10, is amended to read:
60.15 Subd. 10. [REPORTS.] On or before March 15, 2005 2006, and
60.16 March 15, 2007 2008, the special taxing district shall submit a
60.17 levy and expenditure report to the commissioner of revenue and
60.18 to the chairs of the house and senate committees with
60.19 jurisdiction over taxes. Each report must include the amount of
60.20 the district's levies for taxes payable for each of the two
60.21 previous years and its actual expenditures of those revenues.
60.22 Expenditures must be reported by general service category, as
60.23 listed in subdivision 5, and include a separate category for
60.24 administrative expenses.
60.25 [EFFECTIVE DATE.] This section is effective the day
60.26 following final enactment.
60.27 Sec. 3. Minnesota Statutes 2002, section 272.02,
60.28 subdivision 22, is amended to read:
60.29 Subd. 22. [WIND ENERGY CONVERSION SYSTEMS.] All real and
60.30 personal property of a wind energy conversion system as defined
60.31 in section 272.029, subdivision 2, is exempt from property tax
60.32 except that the land on which the property is located remains
60.33 taxable. The value of the land on which the wind energy
60.34 conversion system is located shall not be increased or
60.35 decreased, but shall be valued in the same manner as similar
60.36 land that has not been improved with a wind energy conversion
61.1 system. The land shall be classified based on the most probable
61.2 use of the property if it were not improved with a wind energy
61.3 conversion system.
61.4 [EFFECTIVE DATE.] This section is effective for assessment
61.5 year 2004 and thereafter, for taxes payable in 2005 and
61.6 thereafter.
61.7 Sec. 4. Minnesota Statutes 2003 Supplement, section
61.8 272.02, subdivision 47, is amended to read:
61.9 Subd. 47. [POULTRY LITTER BIOMASS GENERATION FACILITY;
61.10 PERSONAL PROPERTY.] Notwithstanding subdivision 9, clause (a),
61.11 attached machinery and other personal property which is part of
61.12 an electrical generating facility that meets the requirements of
61.13 this subdivision is exempt. At the time of construction, the
61.14 facility must:
61.15 (1) be designed to utilize poultry litter as a primary fuel
61.16 source; and
61.17 (2) be constructed for the purpose of generating power at
61.18 the facility that will be sold pursuant to a contract approved
61.19 by the Public Utilities Commission in accordance with the
61.20 biomass mandate imposed under section 216B.2424.
61.21 Construction of the facility must be commenced after
61.22 January 1, 2003, and before December 31, 2003 2004. Property
61.23 eligible for this exemption does not include electric
61.24 transmission lines and interconnections or gas pipelines and
61.25 interconnections appurtenant to the property or the facility.
61.26 [EFFECTIVE DATE.] This section is effective for assessment
61.27 year 2004, taxes payable in 2005, and thereafter.
61.28 Sec. 5. Minnesota Statutes 2003 Supplement, section
61.29 272.02, subdivision 56, is amended to read:
61.30 Subd. 56. [ELECTRIC GENERATION FACILITY; PERSONAL
61.31 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a),
61.32 attached machinery and other personal property which is part of
61.33 a combined-cycle combustion-turbine electric generation facility
61.34 that exceeds 550 300 megawatts of installed capacity and that
61.35 meets the requirements of this subdivision is exempt. At the
61.36 time of construction, the facility must:
62.1 (1) be designed to utilize natural gas as a primary fuel;
62.2 (2) not be owned by a public utility as defined in section
62.3 216B.02, subdivision 4;
62.4 (3) be located within five miles of an existing natural gas
62.5 pipeline and within four miles of an existing electrical
62.6 transmission substation;
62.7 (4) be located outside the metropolitan area as defined
62.8 under section 473.121, subdivision 2; and
62.9 (5) be designed to provide energy and ancillary services
62.10 and have received a certificate of need under section 216B.243.
62.11 (b) Construction of the facility must be commenced after
62.12 January 1, 2004, and before January 1, 2007, except that
62.13 property eligible for this exemption includes any expansion of
62.14 the facility that also meets the requirements of paragraph (a),
62.15 clauses (1) to (5), without regard to the date that construction
62.16 of the expansion commences. Property eligible for this
62.17 exemption does not include electric transmission lines and
62.18 interconnections or gas pipelines and interconnections
62.19 appurtenant to the property or the facility.
62.20 [EFFECTIVE DATE.] This section is effective for assessment
62.21 year 2005, taxes payable in 2006, and thereafter.
62.22 Sec. 6. Minnesota Statutes 2002, section 272.02, is
62.23 amended by adding a subdivision to read:
62.24 Subd. 68. [ELECTRIC GENERATION FACILITY; PERSONAL
62.25 PROPERTY.] Notwithstanding subdivision 9, clause (a), attached
62.26 machinery and other personal property which is part of a
62.27 simple-cycle, combustion-turbine electric generation facility
62.28 that exceeds 300 megawatts of installed capacity and that meets
62.29 the requirements of this subdivision is exempt. At the time of
62.30 the construction, the facility must:
62.31 (1) be designed to utilize natural gas as a primary fuel;
62.32 (2) be owned by a public utility as defined in section
62.33 216B.02, subdivision 4, and be located at or interconnected with
62.34 an existing generating plant of the utility;
62.35 (3) be designed to provide peaking, emergency backup, or
62.36 contingency services;
63.1 (4) satisfy a resource need identified in an approved
63.2 integrated resource plan filed under section 216B.2422; and
63.3 (5) have received, by resolution, the approval from the
63.4 governing body of the county and the city for the exemption of
63.5 personal property under this subdivision.
63.6 Construction of the facility must be commenced after
63.7 January 1, 2004, and before January 1, 2006. Property eligible
63.8 for this exemption does not include electric transmission lines
63.9 and interconnections or gas pipelines and interconnections
63.10 appurtenant to the property or the facility.
63.11 [EFFECTIVE DATE.] This section is effective for assessment
63.12 year 2005, taxes payable in 2006, and thereafter.
63.13 Sec. 7. Minnesota Statutes 2002, section 272.02, is
63.14 amended by adding a subdivision to read:
63.15 Subd. 69. [ELECTRIC GENERATION FACILITY; PERSONAL
63.16 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a),
63.17 attached machinery and other personal property which is part of
63.18 a simple-cycle combustion-turbine electric generation facility
63.19 that exceeds 290 megawatts of installed capacity and that meets
63.20 the requirements of this subdivision is exempt. At the time of
63.21 construction, the facility must:
63.22 (1) be designed to utilize natural gas as a primary fuel;
63.23 (2) not be owned by a public utility as defined in section
63.24 216B.02, subdivision 4;
63.25 (3) be located within five miles of an existing natural gas
63.26 pipeline and within five miles of an existing electrical
63.27 transmission substation;
63.28 (4) be located outside the metropolitan area as defined
63.29 under section 473.121, subdivision 2;
63.30 (5) be designed to provide peaking capacity energy and
63.31 ancillary services and have satisfied all of the requirements
63.32 under section 216B.243; and
63.33 (6) have received, by resolution, the approval from the
63.34 governing body of the county, city, and school district in which
63.35 the proposed facility is to be located for the exemption of
63.36 personal property under this subdivision.
64.1 (b) Construction of the facility must be commenced after
64.2 January 1, 2005, and before January 1, 2009. Property eligible
64.3 for this exemption does not include electric transmission lines
64.4 and interconnections or gas pipelines and interconnections
64.5 appurtenant to the property or the facility.
64.6 [EFFECTIVE DATE.] This section is effective for assessment
64.7 year 2006, taxes payable in 2007, and thereafter.
64.8 Sec. 8. Minnesota Statutes 2002, section 272.02, is
64.9 amended by adding a subdivision to read:
64.10 Subd. 70. [ELECTRIC GENERATION FACILITY PERSONAL
64.11 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a), and
64.12 section 453.54, subdivision 20, attached machinery and other
64.13 personal property which is part of an electric generation
64.14 facility that exceeds 150 megawatts of installed capacity and
64.15 meets the requirements of this subdivision is exempt. At the
64.16 time of construction, the facility must:
64.17 (1) be designed to utilize natural gas as a primary fuel;
64.18 (2) be owned and operated by a municipal power agency as
64.19 defined in section 453.52, subdivision 8;
64.20 (3) have received the certificate of need under section
64.21 216B.243;
64.22 (4) be located outside the metropolitan area as defined
64.23 under section 473.121, subdivision 2; and
64.24 (5) be designed to be a combined-cycle facility, although
64.25 initially the facility will be operated as a simple-cycle
64.26 combustion turbine.
64.27 (b) To qualify under this subdivision, an agreement must be
64.28 negotiated between the municipal power agency and the host city,
64.29 for a payment in lieu of property taxes to the host city.
64.30 (c) Construction of the facility must be commenced after
64.31 January 1, 2004, and before January 1, 2006. Property eligible
64.32 for this exemption does not include electric transmission lines
64.33 and interconnections or gas pipelines and interconnections
64.34 appurtenant to the property or the facility.
64.35 [EFFECTIVE DATE.] This section is effective for assessment
64.36 year 2005, taxes payable in 2006, and thereafter.
65.1 Sec. 9. Minnesota Statutes 2002, section 272.02, is
65.2 amended by adding a subdivision to read:
65.3 Subd. 71. [BIOMASS ELECTRIC GENERATION FACILITY; PERSONAL
65.4 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a),
65.5 attached machinery and other personal property which is a part
65.6 of an electric generation facility generating up to 30 megawatts
65.7 of installed capacity and that meets the requirements of this
65.8 subdivision is exempt. At the time of construction, the
65.9 facility must:
65.10 (1) be designed to utilize a minimum 90 percent waste
65.11 biomass as a fuel;
65.12 (2) not be owned by a public utility as defined in section
65.13 216B.02, subdivision 4;
65.14 (3) be located within a city of the first class and have
65.15 its primary location at a former garbage transfer station; and
65.16 (4) be designed to have capability to provide baseload
65.17 energy and district heating.
65.18 (b) Construction of the facility must be commenced after
65.19 January 1, 2004, and before January 1, 2008. Property eligible
65.20 for this exemption does not include electric transmission lines
65.21 and interconnections or gas pipelines and interconnections
65.22 appurtenant to the property or the facility.
65.23 [EFFECTIVE DATE.] This section is effective for assessment
65.24 year 2005, taxes payable in 2006, and thereafter.
65.25 Sec. 10. Minnesota Statutes 2002, section 272.02, is
65.26 amended by adding a subdivision to read:
65.27 Subd. 72. [ELECTRIC GENERATION FACILITY; PERSONAL
65.28 PROPERTY.] (a) Notwithstanding subdivision 9, clause (a),
65.29 attached machinery and other personal property that is part of
65.30 either a simple-cycle, combustion-turbine electric generation
65.31 facility that equals or exceeds 150 megawatts of installed
65.32 capacity, or a combined-cycle, combustion-turbine electric
65.33 generation facility that equals or exceeds 225 megawatts of
65.34 installed capacity, and that in either case meets the
65.35 requirements of this subdivision, is exempt. At the time of
65.36 construction, the facility must:
66.1 (1) be designed to utilize natural gas as a primary fuel;
66.2 (2) not be owned by a public utility as defined in section
66.3 216B.02, subdivision 4;
66.4 (3) be located in a metropolitan county defined in section
66.5 473.121, subdivision 4, that has a population greater than
66.6 190,000 and less than 225,000 in the most recent federal
66.7 decennial census, within one mile of an existing natural gas
66.8 pipeline, and within one mile of an existing electrical
66.9 transmission substation; and
66.10 (4) be designed to provide energy and ancillary services
66.11 and have received a certificate of need under section 216B.243.
66.12 (b) Construction of the facility must be commenced after
66.13 January 1, 2005, and before January 1, 2008. Property eligible
66.14 for this exemption does not include electric transmission lines
66.15 and interconnections or gas pipelines and interconnections
66.16 appurtenant to the property or the facility.
66.17 [EFFECTIVE DATE.] This section is effective for assessment
66.18 year 2005, taxes payable in 2006, and thereafter.
66.19 Sec. 11. Minnesota Statutes 2002, section 272.02, is
66.20 amended by adding a subdivision to read:
66.21 Subd. 73. [HOMESTEAD OF DISABLED VETERAN OR SURVIVING
66.22 SPOUSE.] (a) Property otherwise qualifying for homestead
66.23 classification under section 273.13 is exempt from taxation if
66.24 it serves as the homestead of a military veteran, as defined in
66.25 section 197.447, who has a total and permanent service-connected
66.26 disability. To qualify for exemption under this subdivision,
66.27 the veteran must have been honorably discharged from the United
66.28 States armed forces, as indicated by United States Government
66.29 Form DD214 or other official military discharge papers, and must
66.30 be certified by the United States Veterans Administration as
66.31 having a total (100 percent) and permanent service-connected
66.32 disability.
66.33 (b) If a disabled veteran qualifying for exemption under
66.34 paragraph (a) predeceases the veteran's spouse, and if upon the
66.35 death of the veteran the spouse holds the legal or beneficial
66.36 title to the homestead and permanently resides there, the
67.1 exemption from taxation shall carry over to the benefit of the
67.2 veteran's spouse until such time as the spouse remarries or
67.3 sells or otherwise disposes of the property.
67.4 (c) In the case of an agricultural homestead, only the
67.5 portion of the property consisting of the house and garage and
67.6 immediately surrounding one acre of land qualifies for exemption
67.7 under this subdivision.
67.8 (d) A property owner attempting to first qualify for
67.9 exemption under this section must apply to the assessor by July
67.10 1 of the assessment year, except that for assessment year 2004
67.11 application may be made until October 1, 2004. The application
67.12 must be accompanied by supporting documentation as required by
67.13 the assessor. Once a property has been accepted for exemption
67.14 under this section, the property continues to qualify until
67.15 there is a change in ownership of the property.
67.16 [EFFECTIVE DATE.] This section is effective for assessment
67.17 year 2004 and thereafter, for taxes payable in 2005 and
67.18 thereafter.
67.19 Sec. 12. Minnesota Statutes 2002, section 272.0212,
67.20 subdivision 1, is amended to read:
67.21 Subdivision 1. [EXEMPTION.] All qualified property in a
67.22 zone is exempt to the extent and for a period up to the duration
67.23 provided by the zone designation and under sections 469.1731 to
67.24 469.1735.
67.25 [EFFECTIVE DATE.] This section is effective for development
67.26 agreements approved after the day following final enactment and
67.27 beginning for property taxes payable in 2005.
67.28 Sec. 13. Minnesota Statutes 2002, section 272.0212,
67.29 subdivision 2, is amended to read:
67.30 Subd. 2. [LIMITS ON EXEMPTION.] (a) Property in a zone is
67.31 not exempt under this section from the following:
67.32 (1) special assessments;
67.33 (2) ad valorem property taxes specifically levied for the
67.34 payment of principal and interest on debt obligations; and
67.35 (3) all taxes levied by a school district, except equalized
67.36 school levies as defined in section 273.1398, subdivision 1,
68.1 paragraph (e).
68.2 (b) The city may limit the property tax exemption to a
68.3 shorter period than the duration of the zone or to a percentage
68.4 of the property taxes payable or both.
68.5 [EFFECTIVE DATE.] This section is effective for development
68.6 agreements approved after the day following final enactment and
68.7 beginning for property taxes payable in 2005.
68.8 Sec. 14. [272.0275] [PERSONAL PROPERTY USED TO GENERATE
68.9 ELECTRICITY; EXEMPTION.]
68.10 Subdivision 1. [NEW PLANT CONSTRUCTION AFTER JANUARY 1,
68.11 2004.] For a new generating plant built and placed in service
68.12 after January 1, 2004, its personal property used to generate
68.13 electric power is exempt from property taxation, including under
68.14 section 453.54, subdivision 20, if an exemption of generation
68.15 personal property form, with an attached siting agreement, is
68.16 filed with the Department of Revenue. The form must be signed
68.17 by the utility, and the county and city or town where the
68.18 facility is proposed to be located.
68.19 Subd. 2. [EXISTING PLANT; INCREASE IN NAMEPLATE CAPACITY.]
68.20 For a plant existing or under construction on the day of final
68.21 enactment of this act, a partial exemption applies if the
68.22 nameplate capacity of the plant is increased from that existing
68.23 on the day of final enactment of this act, and if an exemption
68.24 of generation personal property form, with an attached siting
68.25 agreement is filed with the Department of Revenue. The form
68.26 must be signed by the utility, and the county and city or town
68.27 where the facility expansion is located. This partial exemption
68.28 must be computed by taking the increase in megawatts over the
68.29 total megawatt nameplate capacity after construction is
68.30 complete, multiplied by the market value of all taxable tools,
68.31 implements, and machinery of the generating plant as determined
68.32 by the commissioner of revenue. The resulting exemption is
68.33 effective beginning in the next assessment year.
68.34 Subd. 3. [IN-LIEU PAYMENT; LIMITATION.] If an in-lieu
68.35 payment or service fee is negotiated between a facility exempted
68.36 under this section and the county, city, or town where the
69.1 facility is located, the payment or fee in any year may not
69.2 exceed the property tax revenue that the jurisdiction would
69.3 receive from the facility if it were not exempt.
69.4 Subd. 4. [DEFINITION; APPLICABILITY.] For purposes of this
69.5 section, "personal property" means tools, implements, and
69.6 machinery of the generating plant. The exemption under this
69.7 section does not apply to transformers, transmission lines,
69.8 distribution lines, or any other tools, implements, and
69.9 machinery that are part of an electric substation, wherever
69.10 located.
69.11 [EFFECTIVE DATE.] This section is effective the day
69.12 following final enactment.
69.13 Sec. 15. Minnesota Statutes 2002, section 272.029,
69.14 subdivision 4, is amended to read:
69.15 Subd. 4. [REPORTS.] (a) An owner of a wind energy
69.16 conversion system subject to tax under subdivision 3 shall file
69.17 a report with the commissioner of revenue annually on or before
69.18 March 1 February 1 detailing the amount of electricity in
69.19 kilowatt-hours that was produced by the wind energy conversion
69.20 system for the previous calendar year. The commissioner shall
69.21 prescribe the form of the report. The report must contain the
69.22 information required by the commissioner to determine the tax
69.23 due to each county under this section for the current year. If
69.24 an owner of a wind energy conversion system subject to taxation
69.25 under this section fails to file the report by the due date, the
69.26 commissioner of revenue shall determine the tax based upon the
69.27 nameplate capacity of the system multiplied by a capacity factor
69.28 of 40 percent.
69.29 (b) On or before March 31 February 28, the commissioner of
69.30 revenue shall notify the owner of the wind energy conversion
69.31 systems of the tax due to each county for the current year and
69.32 shall certify to the county auditor of each county in which the
69.33 systems are located the tax due from each owner for the current
69.34 year.
69.35 [EFFECTIVE DATE.] This section is effective for taxes
69.36 payable in 2005 and thereafter.
70.1 Sec. 16. Minnesota Statutes 2002, section 272.029,
70.2 subdivision 6, is amended to read:
70.3 Subd. 6. [DISTRIBUTION OF REVENUES.] Revenues from the
70.4 taxes imposed under subdivision 5 must be part of the settlement
70.5 between the county treasurer and the county auditor under
70.6 section 276.09. The revenue must be distributed by the county
70.7 auditor or the county treasurer to all local taxing
70.8 jurisdictions in which the wind energy conversion system is
70.9 located, in the same proportion that each of the taxing
70.10 jurisdiction's current previous year's net tax capacity based
70.11 tax rate is to the current previous year's total local net tax
70.12 capacity based rate.
70.13 [EFFECTIVE DATE.] This section is effective for taxes
70.14 payable in 2004 and thereafter.
70.15 Sec. 17. Minnesota Statutes 2003 Supplement, section
70.16 273.11, subdivision 1a, is amended to read:
70.17 Subd. 1a. [LIMITED MARKET VALUE.] In the case of all
70.18 property classified as agricultural homestead or nonhomestead,
70.19 residential homestead or nonhomestead, timber, or noncommercial
70.20 seasonal residential recreational, or class 1c resort property,
70.21 the assessor shall compare the value with the taxable portion of
70.22 the value determined in the preceding assessment, except that
70.23 for class 1c resort property for assessment year 2004, the
70.24 assessor shall determine the limited market value as provided in
70.25 subdivision 1b.
70.26 For assessment year 2002, the amount of the increase shall
70.27 not exceed the greater of (1) ten percent of the value in the
70.28 preceding assessment, or (2) 15 percent of the difference
70.29 between the current assessment and the preceding assessment.
70.30 For assessment year 2003, the amount of the increase shall
70.31 not exceed the greater of (1) 12 percent of the value in the
70.32 preceding assessment, or (2) 20 percent of the difference
70.33 between the current assessment and the preceding assessment.
70.34 For assessment year 2004, the amount of the increase shall
70.35 not exceed the greater of (1) 15 percent of the value in the
70.36 preceding assessment, or (2) 25 percent of the difference
71.1 between the current assessment and the preceding assessment.
71.2 For assessment year 2005, the amount of the increase shall
71.3 not exceed the greater of (1) 15 percent of the value in the
71.4 preceding assessment, or (2) 33 percent of the difference
71.5 between the current assessment and the preceding assessment.
71.6 For assessment year 2006, the amount of the increase shall
71.7 not exceed the greater of (1) 15 percent of the value in the
71.8 preceding assessment, or (2) 50 percent of the difference
71.9 between the current assessment and the preceding assessment.
71.10 This limitation shall not apply to increases in value due
71.11 to improvements. For purposes of this subdivision, the term
71.12 "assessment" means the value prior to any exclusion under
71.13 subdivision 16.
71.14 The provisions of this subdivision shall be in effect
71.15 through assessment year 2006 as provided in this subdivision.
71.16 For purposes of this subdivision and subdivision 1b, "class
71.17 1c resort property" includes the portion of the property
71.18 classified class 1a or 1b homestead, the portion of the property
71.19 classified 1c, plus any remaining portion of the resort that is
71.20 classified 4c under section 273.13, subdivision 25, paragraph
71.21 (d), clause (1).
71.22 For purposes of the assessment/sales ratio study conducted
71.23 under section 127A.48, and the computation of state aids paid
71.24 under chapters 122A, 123A, 123B, 124D, 125A, 126C, 127A, and
71.25 477A, market values and net tax capacities determined under this
71.26 subdivision and subdivision 16, shall be used.
71.27 [EFFECTIVE DATE.] This section is effective for assessment
71.28 year 2004 through 2006, for taxes payable in 2005 through 2007.
71.29 Sec. 18. Minnesota Statutes 2002, section 273.11, is
71.30 amended by adding a subdivision to read:
71.31 Subd. 1b. [CLASS 1C RESORTS; 2004 ASSESSMENT ONLY.] For
71.32 assessment year 2004, the valuation increase on class 1c resort
71.33 property shall not exceed the greater of (1) 15 percent of the
71.34 value of its 2002 assessment, or (2) 25 percent of the
71.35 difference in value between its 2004 assessment and its 2002
71.36 assessment. The valuation increase on class 1c resort property
72.1 for the 2005 and 2006 assessment years shall be determined based
72.2 upon the schedule contained in subdivision 1a.
72.3 [EFFECTIVE DATE.] This section is effective the day
72.4 following final enactment.
72.5 Sec. 19. Minnesota Statutes 2002, section 273.111,
72.6 subdivision 6, is amended to read:
72.7 Subd. 6. [AGRICULTURAL USE.] Real property qualifying
72.8 under subdivision 3 shall be considered to be in agricultural
72.9 use provided that annually:
72.10 (1) at least 33-1/3 percent of the total family income of
72.11 the owner is derived therefrom, or the total production income
72.12 including rental from the property is $300 $500 plus $10 $50 per
72.13 tillable acre; and
72.14 (2) it is devoted to the production for sale of
72.15 agricultural products as defined in section 273.13, subdivision
72.16 23, paragraph (e).
72.17 Slough, wasteland, and woodland contiguous to or surrounded
72.18 by land that is entitled to valuation and tax deferment under
72.19 this section is considered to be in agricultural use if under
72.20 the same ownership and management.
72.21 [EFFECTIVE DATE.] This section is effective for assessment
72.22 year 2005, taxes payable in 2006, and thereafter.
72.23 Sec. 20. Minnesota Statutes 2002, section 273.124, is
72.24 amended by adding a subdivision to read:
72.25 Subd. 22. [RESIDENTIAL PROPERTY ALSO USED TO PROVIDE DAY
72.26 CARE.] Residential and agricultural property that is also used
72.27 to provide day care must be classified without regard to its use
72.28 in providing the day care, provided that the operator of the day
72.29 care service is occupying the property as the operator's
72.30 permanent residence. For purposes of this subdivision, "day
72.31 care" means family day care or adult family day care licensed
72.32 under section 245A.03, or provided without license under section
72.33 245A.03, subdivision 2, paragraph (a), clause (2).
72.34 [EFFECTIVE DATE.] This section is effective for assessment
72.35 year 2004 and thereafter, for taxes payable in 2005 and
72.36 thereafter.
73.1 Sec. 21. Minnesota Statutes 2003 Supplement, section
73.2 273.13, subdivision 22, is amended to read:
73.3 Subd. 22. [CLASS 1.] (a) Except as provided in subdivision
73.4 23 and in paragraphs (b) and (c), real estate which is
73.5 residential and used for homestead purposes is class 1a. In the
73.6 case of a duplex or triplex in which one of the units is used
73.7 for homestead purposes, the entire property is deemed to be used
73.8 for homestead purposes. The market value of class 1a property
73.9 must be determined based upon the value of the house, garage,
73.10 and land.
73.11 The first $500,000 of market value of class 1a property has
73.12 a net class rate of one percent of its market value; and the
73.13 market value of class 1a property that exceeds $500,000 has a
73.14 class rate of 1.25 percent of its market value.
73.15 (b) Class 1b property includes homestead real estate or
73.16 homestead manufactured homes used for the purposes of a
73.17 homestead by
73.18 (1) any person who is blind as defined in section 256D.35,
73.19 or the blind person and the blind person's spouse; or
73.20 (2) any person, hereinafter referred to as "veteran," who:
73.21 (i) served in the active military or naval service of the
73.22 United States; and
73.23 (ii) is entitled to compensation under the laws and
73.24 regulations of the United States for permanent and total
73.25 service-connected disability due to the loss, or loss of use, by
73.26 reason of amputation, ankylosis, progressive muscular
73.27 dystrophies, or paralysis, of both lower extremities, such as to
73.28 preclude motion without the aid of braces, crutches, canes, or a
73.29 wheelchair; and
73.30 (iii) has acquired a special housing unit with special
73.31 fixtures or movable facilities made necessary by the nature of
73.32 the veteran's disability, or the surviving spouse of the
73.33 deceased veteran for as long as the surviving spouse retains the
73.34 special housing unit as a homestead; or
73.35 (3) any person who is permanently and totally disabled.
73.36 Property is classified and assessed under clause (3) (2)
74.1 only if the government agency or income-providing source
74.2 certifies, upon the request of the homestead occupant, that the
74.3 homestead occupant satisfies the disability requirements of this
74.4 paragraph.
74.5 Property is classified and assessed pursuant to clause (1)
74.6 only if the commissioner of revenue certifies to the assessor
74.7 that the homestead occupant satisfies the requirements of this
74.8 paragraph.
74.9 Permanently and totally disabled for the purpose of this
74.10 subdivision means a condition which is permanent in nature and
74.11 totally incapacitates the person from working at an occupation
74.12 which brings the person an income. The first $32,000 market
74.13 value of class 1b property has a net class rate of .45 percent
74.14 of its market value. The remaining market value of class 1b
74.15 property has a class rate using the rates for class 1a or class
74.16 2a property, whichever is appropriate, of similar market value.
74.17 (c) Class 1c property is commercial use real property that
74.18 abuts a lakeshore line and is devoted to temporary and seasonal
74.19 residential occupancy for recreational purposes but not devoted
74.20 to commercial purposes for more than 250 days in the year
74.21 preceding the year of assessment, and that includes a portion
74.22 used as a homestead by the owner, which includes a dwelling
74.23 occupied as a homestead by a shareholder of a corporation that
74.24 owns the resort, a partner in a partnership that owns the
74.25 resort, or a member of a limited liability company that owns the
74.26 resort even if the title to the homestead is held by the
74.27 corporation, partnership, or limited liability company. For
74.28 purposes of this clause, property is devoted to a commercial
74.29 purpose on a specific day if any portion of the property,
74.30 excluding the portion used exclusively as a homestead, is used
74.31 for residential occupancy and a fee is charged for residential
74.32 occupancy. The first $500,000 of market value of class 1c
74.33 property has a class rate of one percent, and the remaining
74.34 market value of class 1c property has a class rate of one
74.35 percent, with the following limitation: the area of the
74.36 property must not exceed 100 feet of lakeshore footage for each
75.1 cabin or campsite located on the property up to a total of 800
75.2 feet and 500 feet in depth, measured away from the lakeshore.
75.3 If any portion of the class 1c resort property is classified as
75.4 class 4c under subdivision 25, the entire property must meet the
75.5 requirements of subdivision 25, paragraph (d), clause (1), to
75.6 qualify for class 1c treatment under this paragraph.
75.7 (d) Class 1d property includes structures that meet all of
75.8 the following criteria:
75.9 (1) the structure is located on property that is classified
75.10 as agricultural property under section 273.13, subdivision 23;
75.11 (2) the structure is occupied exclusively by seasonal farm
75.12 workers during the time when they work on that farm, and the
75.13 occupants are not charged rent for the privilege of occupying
75.14 the property, provided that use of the structure for storage of
75.15 farm equipment and produce does not disqualify the property from
75.16 classification under this paragraph;
75.17 (3) the structure meets all applicable health and safety
75.18 requirements for the appropriate season; and
75.19 (4) the structure is not salable as residential property
75.20 because it does not comply with local ordinances relating to
75.21 location in relation to streets or roads.
75.22 The market value of class 1d property has the same class
75.23 rates as class 1a property under paragraph (a).
75.24 [EFFECTIVE DATE.] This section is effective for assessment
75.25 year 2004 and thereafter, for taxes payable in 2005 and
75.26 thereafter.
75.27 Sec. 22. [273.1321] [VACANT COMMERCIAL INDUSTRIAL
75.28 PROPERTIES.]
75.29 Subdivision 1. [AUTHORITY.] A city may establish, by
75.30 ordinance, a program to encourage redevelopment, provide for
75.31 better utilization of commercial industrial property, and
75.32 eliminate blighting influences by revoking the eligibility of
75.33 individual commercial industrial properties to receive the
75.34 credit authorized under section 273.1398, subdivision 4. The
75.35 program may revoke eligibility only if the property has been
75.36 vacant, as defined in subdivision 3, clauses (1) to (3), for
76.1 three or more consecutive years prior to the current assessment
76.2 year, or under subdivision 3, clause (4), for five or more
76.3 consecutive years prior to the current assessment year.
76.4 Subd. 2. [MINIMUM REQUIREMENTS.] The program must provide:
76.5 (1) standards for determining whether a property is vacant;
76.6 (2) written assessment notice by the city or county to the
76.7 property owner informing the owner that the property's
76.8 eligibility will be revoked;
76.9 (3) opportunity for the property owner to appeal the
76.10 revocation at the board of equalization;
76.11 (4) timely notice to the county assessor of the property's
76.12 eligibility revocation, if the city has a city assessor and the
76.13 city assessor has revoked the property's eligibility; and
76.14 (5) any other provisions the city determines are necessary
76.15 or appropriate to the operation of the program to achieve its
76.16 purposes.
76.17 Subd. 3. [DEFINITION OF VACANT.] A program established
76.18 under this section may provide that a property is vacant if the
76.19 property is:
76.20 (1) condemned, dangerous, or having multiple building code
76.21 violations;
76.22 (2) condemned and illegally occupied;
76.23 (3) either occupied or unoccupied, during which time the
76.24 enforcement officer for the municipality has issued multiple
76.25 orders to correct nuisance conditions; or
76.26 (4) unoccupied and not utilized for a commercial or
76.27 industrial purpose.
76.28 Subd. 4. [NOTICE TO PROPERTY OWNER.] The municipality
76.29 shall give notice to the property owner requiring that any
76.30 conditions in subdivision 3, clauses (1) to (3) be remedied, and
76.31 that the property be occupied and used for a commercial or
76.32 industrial purpose for at least 180 days during the next
76.33 12-month period, or else the property may cease to be eligible
76.34 for the credit under section 273.1398, subdivision 4.
76.35 [EFFECTIVE DATE.] This section is effective for taxes
76.36 payable in 2006 and thereafter.
77.1 Sec. 23. Minnesota Statutes 2002, section 273.1384,
77.2 subdivision 1, is amended to read:
77.3 Subdivision 1. [RESIDENTIAL HOMESTEAD MARKET VALUE
77.4 CREDIT.] Each county auditor shall determine a homestead credit
77.5 for each class 1a, 1b, 1c, and 2a homestead property within the
77.6 county equal to 0.4 percent of the market value of the
77.7 property. The amount of homestead credit for a homestead may
77.8 not exceed $304 and is reduced by .09 percent of the market
77.9 value in excess of $76,000. In the case of an agricultural or
77.10 resort homestead, only the market value of the house, garage,
77.11 and immediately surrounding one acre of land is eligible in
77.12 determining the property's homestead credit. In the case of a
77.13 property which that is classified as part a partial homestead
77.14 and part nonhomestead, the credit shall apply only to the
77.15 homestead portion of the property. because the property is not
77.16 occupied by all owners or both spouses, the credit is determined
77.17 based on the homestead portion only, except that the credit must
77.18 not exceed the credit that would be calculated if the entire
77.19 residential portion of the property was classified as homestead.
77.20 [EFFECTIVE DATE.] This section is effective for taxes
77.21 payable in 2005 and thereafter.
77.22 Sec. 24. Minnesota Statutes 2003 Supplement, section
77.23 274.014, subdivision 3, is amended to read:
77.24 Subd. 3. [PROOF OF COMPLIANCE; TRANSFER OF DUTIES.] (a)
77.25 Any city or town that does not conducts local boards of appeal
77.26 and equalization meetings must provide proof to the county
77.27 assessor by December 1, 2006 2005, and each year thereafter,
77.28 that it is in compliance with the requirements of subdivision 2,
77.29 and that it had. Beginning in 2006, this notice must also
77.30 verify that there was a quorum of voting members at each meeting
77.31 of the board of appeal and equalization in the prior current
77.32 year,. A city or town that does not comply with these
77.33 requirements is deemed to have transferred its board of appeal
77.34 and equalization powers to the county under section 274.01,
77.35 subdivision 3, for beginning with the following year's
77.36 assessment and continuing unless the powers are reinstated under
78.1 paragraph (c).
78.2 (b) The county shall notify the taxpayers when the board of
78.3 appeal and equalization for a city or town has been transferred
78.4 to the county under this subdivision and, prior to the meeting
78.5 time of the county board of equalization, the county shall make
78.6 available to those taxpayers a procedure for a review of the
78.7 assessments, including, but not limited to, open book meetings.
78.8 This alternate review process shall take place in April and May.
78.9 (c) A local board whose powers are transferred to the
78.10 county under this subdivision may be reinstated by resolution of
78.11 the governing body of the city or town and upon proof of
78.12 compliance with the requirements of subdivision 2. The
78.13 resolution and proofs must be provided to the county assessor by
78.14 December 1 in order to be effective for the following year's
78.15 assessment.
78.16 Sec. 25. Minnesota Statutes 2003 Supplement, section
78.17 275.065, subdivision 3, is amended to read:
78.18 Subd. 3. [NOTICE OF PROPOSED PROPERTY TAXES.] (a) The
78.19 county auditor shall prepare and the county treasurer shall
78.20 deliver after November 10 and on or before November 24 each
78.21 year, by first class mail to each taxpayer at the address listed
78.22 on the county's current year's assessment roll, a notice of
78.23 proposed property taxes.
78.24 (b) The commissioner of revenue shall prescribe the form of
78.25 the notice.
78.26 (c) The notice must inform taxpayers that it contains the
78.27 amount of property taxes each taxing authority proposes to
78.28 collect for taxes payable the following year. In the case of a
78.29 town, or in the case of the state general tax, the final tax
78.30 amount will be its proposed tax. In the case of taxing
78.31 authorities required to hold a public meeting under subdivision
78.32 6, the notice must clearly state that each taxing authority,
78.33 including regional library districts established under section
78.34 134.201, and including the metropolitan taxing districts as
78.35 defined in paragraph (i), but excluding all other special taxing
78.36 districts and towns, will hold a public meeting to receive
79.1 public testimony on the proposed budget and proposed or final
79.2 property tax levy, or, in case of a school district, on the
79.3 current budget and proposed property tax levy. It must clearly
79.4 state the time and place of each taxing authority's meeting, a
79.5 telephone number for the taxing authority that taxpayers may
79.6 call if they have questions related to the notice, and an
79.7 address where comments will be received by mail.
79.8 (d) The notice must state for each parcel:
79.9 (1) the market value of the property as determined under
79.10 section 273.11, and used for computing property taxes payable in
79.11 the following year and for taxes payable in the current year as
79.12 each appears in the records of the county assessor on November 1
79.13 of the current year; and, in the case of residential property,
79.14 whether the property is classified as homestead or
79.15 nonhomestead. The notice must clearly inform taxpayers of the
79.16 years to which the market values apply and that the values are
79.17 final values;
79.18 (2) the items listed below, shown separately by county,
79.19 city or town, and state general tax, net of the residential and
79.20 agricultural homestead credit under section 273.1384, voter
79.21 approved school levy, other local school levy, and the sum of
79.22 the special taxing districts, and as a total of all taxing
79.23 authorities:
79.24 (i) the actual tax for taxes payable in the current year;
79.25 and
79.26 (ii) the proposed tax amount.
79.27 If the county levy under clause (2) includes an amount for
79.28 a lake improvement district as defined under sections 103B.501
79.29 to 103B.581, the amount attributable for that purpose must be
79.30 separately stated from the remaining county levy amount.
79.31 In the case of a town or the state general tax, the final
79.32 tax shall also be its proposed tax unless the town changes its
79.33 levy at a special town meeting under section 365.52. If a
79.34 school district has certified under section 126C.17, subdivision
79.35 9, that a referendum will be held in the school district at the
79.36 November general election, the county auditor must note next to
80.1 the school district's proposed amount that a referendum is
80.2 pending and that, if approved by the voters, the tax amount may
80.3 be higher than shown on the notice. In the case of the city of
80.4 Minneapolis, the levy for the Minneapolis Library Board and the
80.5 levy for Minneapolis Park and Recreation shall be listed
80.6 separately from the remaining amount of the city's levy. In the
80.7 case of the city of St. Paul, the levy for the St. Paul Library
80.8 Agency must be listed separately from the remaining amount of
80.9 the city's levy. In the case of Ramsey County, any amount
80.10 levied under section 134.07 may be listed separately from the
80.11 remaining amount of the county's levy. In the case of a parcel
80.12 where tax increment or the fiscal disparities areawide tax under
80.13 chapter 276A or 473F applies, the proposed tax levy on the
80.14 captured value or the proposed tax levy on the tax capacity
80.15 subject to the areawide tax must each be stated separately and
80.16 not included in the sum of the special taxing districts; and
80.17 (3) the increase or decrease between the total taxes
80.18 payable in the current year and the total proposed taxes,
80.19 expressed as a percentage.
80.20 For purposes of this section, the amount of the tax on
80.21 homesteads qualifying under the senior citizens' property tax
80.22 deferral program under chapter 290B is the total amount of
80.23 property tax before subtraction of the deferred property tax
80.24 amount.
80.25 (e) The notice must clearly state that the proposed or
80.26 final taxes do not include the following:
80.27 (1) special assessments;
80.28 (2) levies approved by the voters after the date the
80.29 proposed taxes are certified, including bond referenda and
80.30 school district levy referenda;
80.31 (3) a levy limit increase approved by the voters by the
80.32 first Tuesday after the first Monday in November of the levy
80.33 year as provided under section 275.73;
80.34 (4) amounts necessary to pay cleanup or other costs due to
80.35 a natural disaster occurring after the date the proposed taxes
80.36 are certified;
81.1 (5) amounts necessary to pay tort judgments against the
81.2 taxing authority that become final after the date the proposed
81.3 taxes are certified; and
81.4 (6) the contamination tax imposed on properties which
81.5 received market value reductions for contamination.
81.6 (f) Except as provided in subdivision 7, failure of the
81.7 county auditor to prepare or the county treasurer to deliver the
81.8 notice as required in this section does not invalidate the
81.9 proposed or final tax levy or the taxes payable pursuant to the
81.10 tax levy.
81.11 (g) If the notice the taxpayer receives under this section
81.12 lists the property as nonhomestead, and satisfactory
81.13 documentation is provided to the county assessor by the
81.14 applicable deadline, and the property qualifies for the
81.15 homestead classification in that assessment year, the assessor
81.16 shall reclassify the property to homestead for taxes payable in
81.17 the following year.
81.18 (h) In the case of class 4 residential property used as a
81.19 residence for lease or rental periods of 30 days or more, the
81.20 taxpayer must either:
81.21 (1) mail or deliver a copy of the notice of proposed
81.22 property taxes to each tenant, renter, or lessee; or
81.23 (2) post a copy of the notice in a conspicuous place on the
81.24 premises of the property.
81.25 The notice must be mailed or posted by the taxpayer by
81.26 November 27 or within three days of receipt of the notice,
81.27 whichever is later. A taxpayer may notify the county treasurer
81.28 of the address of the taxpayer, agent, caretaker, or manager of
81.29 the premises to which the notice must be mailed in order to
81.30 fulfill the requirements of this paragraph.
81.31 (i) For purposes of this subdivision, subdivisions 5a and
81.32 6, "metropolitan special taxing districts" means the following
81.33 taxing districts in the seven-county metropolitan area that levy
81.34 a property tax for any of the specified purposes listed below:
81.35 (1) Metropolitan Council under section 473.132, 473.167,
81.36 473.249, 473.325, 473.446, 473.521, 473.547, or 473.834;
82.1 (2) Metropolitan Airports Commission under section 473.667,
82.2 473.671, or 473.672; and
82.3 (3) Metropolitan Mosquito Control Commission under section
82.4 473.711.
82.5 For purposes of this section, any levies made by the
82.6 regional rail authorities in the county of Anoka, Carver,
82.7 Dakota, Hennepin, Ramsey, Scott, or Washington under chapter
82.8 398A shall be included with the appropriate county's levy and
82.9 shall be discussed at that county's public hearing.
82.10 [EFFECTIVE DATE.] This section is effective for notices for
82.11 property taxes levied in 2004, payable in 2005, and thereafter.
82.12 Sec. 26. Minnesota Statutes 2002, section 276.04,
82.13 subdivision 2, is amended to read:
82.14 Subd. 2. [CONTENTS OF TAX STATEMENTS.] (a) The treasurer
82.15 shall provide for the printing of the tax statements. The
82.16 commissioner of revenue shall prescribe the form of the property
82.17 tax statement and its contents. The statement must contain a
82.18 tabulated statement of the dollar amount due to each taxing
82.19 authority and the amount of the state tax from the parcel of
82.20 real property for which a particular tax statement is prepared.
82.21 The dollar amounts attributable to the county, the state tax,
82.22 the voter approved school tax, the other local school tax, the
82.23 township or municipality, and the total of the metropolitan
82.24 special taxing districts as defined in section 275.065,
82.25 subdivision 3, paragraph (i), must be separately stated. The
82.26 amounts due all other special taxing districts, if any, may be
82.27 aggregated. If the county levy under this paragraph includes an
82.28 amount for a lake improvement district as defined under sections
82.29 103B.501 to 103B.581, the amount attributable for that purpose
82.30 must be separately stated from the remaining county levy
82.31 amount. In the case of Ramsey County, if the county levy under
82.32 this paragraph includes an amount for public library service
82.33 under section 134.07, the amount attributable for that purpose
82.34 may be separately stated from the remaining county levy amount.
82.35 The amount of the tax on homesteads qualifying under the senior
82.36 citizens' property tax deferral program under chapter 290B is
83.1 the total amount of property tax before subtraction of the
83.2 deferred property tax amount. The amount of the tax on
83.3 contamination value imposed under sections 270.91 to 270.98, if
83.4 any, must also be separately stated. The dollar amounts,
83.5 including the dollar amount of any special assessments, may be
83.6 rounded to the nearest even whole dollar. For purposes of this
83.7 section whole odd-numbered dollars may be adjusted to the next
83.8 higher even-numbered dollar. The amount of market value
83.9 excluded under section 273.11, subdivision 16, if any, must also
83.10 be listed on the tax statement.
83.11 (b) The property tax statements for manufactured homes and
83.12 sectional structures taxed as personal property shall contain
83.13 the same information that is required on the tax statements for
83.14 real property.
83.15 (c) Real and personal property tax statements must contain
83.16 the following information in the order given in this paragraph.
83.17 The information must contain the current year tax information in
83.18 the right column with the corresponding information for the
83.19 previous year in a column on the left:
83.20 (1) the property's estimated market value under section
83.21 273.11, subdivision 1;
83.22 (2) the property's taxable market value after reductions
83.23 under section 273.11, subdivisions 1a and 16;
83.24 (3) the property's gross tax, calculated by adding the
83.25 property's total property tax to the sum of the aids enumerated
83.26 in clause (4);
83.27 (4) a total of the following aids:
83.28 (i) education aids payable under chapters 122A, 123A, 123B,
83.29 124D, 125A, 126C, and 127A;
83.30 (ii) local government aids for cities, towns, and counties
83.31 under chapter 477A;
83.32 (iii) disparity reduction aid under section 273.1398; and
83.33 (iv) homestead and agricultural credit aid under section
83.34 273.1398;
83.35 (5) for homestead residential and agricultural properties,
83.36 the credits under section 273.1384;
84.1 (6) any credits received under sections 273.119; 273.123;
84.2 273.135; 273.1391; 273.1398, subdivision 4; 469.171; and
84.3 473H.10, except that the amount of credit received under section
84.4 273.135 must be separately stated and identified as "taconite
84.5 tax relief"; and
84.6 (7) the net tax payable in the manner required in paragraph
84.7 (a).
84.8 (d) If the county uses envelopes for mailing property tax
84.9 statements and if the county agrees, a taxing district may
84.10 include a notice with the property tax statement notifying
84.11 taxpayers when the taxing district will begin its budget
84.12 deliberations for the current year, and encouraging taxpayers to
84.13 attend the hearings. If the county allows notices to be
84.14 included in the envelope containing the property tax statement,
84.15 and if more than one taxing district relative to a given
84.16 property decides to include a notice with the tax statement, the
84.17 county treasurer or auditor must coordinate the process and may
84.18 combine the information on a single announcement.
84.19 The commissioner of revenue shall certify to the county
84.20 auditor the actual or estimated aids enumerated in clause (4)
84.21 that local governments will receive in the following year. The
84.22 commissioner must certify this amount by January 1 of each year.
84.23 [EFFECTIVE DATE.] This section is effective for property
84.24 tax statements for taxes payable in 2005 and thereafter.
84.25 Sec. 27. Minnesota Statutes 2002, section 290A.03,
84.26 subdivision 13, is amended to read:
84.27 Subd. 13. [PROPERTY TAXES PAYABLE.] (a) "Initial property
84.28 taxes payable" means (i) the property tax exclusive of payable
84.29 on a claimant's homestead plus (ii) any fees or charges for
84.30 police or fire services included in the total amount on the
84.31 property tax statement, excluding charges related to capital
84.32 expenditures and nuisance charges under section 429.101.
84.33 (b) "Property taxes payable" means initial property taxes
84.34 payable minus
84.35 (i) special assessments, other than fees or charges for
84.36 police or fire services that are included in paragraph (a)(ii);
85.1 (ii) penalties, and;
85.2 (iii) interest payable on a claimant's homestead after;
85.3 (iv) deductions made under sections 273.135, 273.1384,
85.4 273.1391, 273.42, subdivision 2, and any other state paid
85.5 property tax credits in any calendar year,; and after
85.6 (v) any refund claimed and allowable under section 290A.04,
85.7 subdivision 2h, that is first payable in the year that the
85.8 property tax is payable.
85.9 (c) In the case of a claimant who makes ground lease
85.10 payments, "property taxes payable" includes the amount of the
85.11 payments directly attributable to the property taxes assessed
85.12 against the parcel on which the house is located. No
85.13 apportionment or reduction of the "property taxes payable" shall
85.14 be required for the use of a portion of the claimant's homestead
85.15 for a business purpose if the claimant does not deduct any
85.16 business depreciation expenses for the use of a portion of the
85.17 homestead in the determination of federal adjusted gross
85.18 income. For homesteads which are manufactured homes as defined
85.19 in section 273.125, subdivision 8, and for homesteads which are
85.20 park trailers taxed as manufactured homes under section 168.012,
85.21 subdivision 9, "property taxes payable" shall also include 19
85.22 percent of the gross rent paid in the preceding year for the
85.23 site on which the homestead is located. When a homestead is
85.24 owned by two or more persons as joint tenants or tenants in
85.25 common, such tenants shall determine between them which tenant
85.26 may claim the property taxes payable on the homestead. If they
85.27 are unable to agree, the matter shall be referred to the
85.28 commissioner of revenue whose decision shall be final. Property
85.29 taxes are considered payable in the year prescribed by law for
85.30 payment of the taxes.
85.31 (d) In the case of a claim relating to "property taxes
85.32 payable," the claimant must have owned and occupied the
85.33 homestead on January 2 of the year in which the tax is payable
85.34 and (i) the property must have been classified as homestead
85.35 property pursuant to section 273.124, on or before December 15
85.36 of the assessment year to which the "property taxes payable"
86.1 relate; or (ii) the claimant must provide documentation from the
86.2 local assessor that application for homestead classification has
86.3 been made on or before December 15 of the year in which the
86.4 "property taxes payable" were payable and that the assessor has
86.5 approved the application.
86.6 [EFFECTIVE DATE.] This section is effective for refunds
86.7 based on property taxes payable in 2005 and following years.
86.8 Sec. 28. Minnesota Statutes 2002, section 290A.07, is
86.9 amended by adding a subdivision to read:
86.10 Subd. 5. [EARLY PAYMENT; E-FILE CLAIMS.] The commissioner
86.11 may pay a claim up to 30 days earlier than the first permitted
86.12 date under subdivision 2a or 3 if the claim was submitted by
86.13 electronic means.
86.14 [EFFECTIVE DATE.] This section is effective the day
86.15 following final enactment.
86.16 Sec. 29. Minnesota Statutes 2002, section 365.43,
86.17 subdivision 1, is amended to read:
86.18 Subdivision 1. [LEVIED AMOUNT IS SPENDING LIMIT TOTAL
86.19 REVENUE DEFINED.] A town must not contract debts or spend more
86.20 money in a year than the taxes levied for the year its total
86.21 revenue without a favorable vote of a majority of the town's
86.22 electors. In this section, "total revenue" means property taxes
86.23 payable in that year as well as amounts received from all other
86.24 sources and amounts carried forward from the last year.
86.25 Sec. 30. Minnesota Statutes 2002, section 365.431, is
86.26 amended to read:
86.27 365.431 [AMOUNT VOTED AT MEETING IS TAX LIMIT.]
86.28 Except as otherwise authorized by law, the tax for town
86.29 purposes must not be more than the amount voted to be raised at
86.30 the annual town meeting.
86.31 Sec. 31. Minnesota Statutes 2002, section 477A.11,
86.32 subdivision 4, is amended to read:
86.33 Subd. 4. [OTHER NATURAL RESOURCES LAND.] "Other natural
86.34 resources land" means:
86.35 (1) any other land presently owned in fee title by the
86.36 state and administered by the commissioner, or any tax-forfeited
87.1 land, other than platted lots within a city or those lands
87.2 described under subdivision 3, clause (2), which is owned by the
87.3 state and administered by the commissioner or by the county in
87.4 which it is located; and
87.5 (2) land leased by the state from the United States of
87.6 America through the United States Secretary of Agriculture
87.7 pursuant to Title III of the Bankhead Jones Farm Tenant Act,
87.8 which land is commonly referred to as land utilization project
87.9 land that is administered by the commissioner.
87.10 [EFFECTIVE DATE.] This section is effective for aids paid
87.11 in calendar year 2005 and thereafter.
87.12 Sec. 32. Minnesota Statutes 2002, section 477A.11, is
87.13 amended by adding a subdivision to read:
87.14 Subd. 5. [LAND UTILIZATION PROJECT LAND.] "Land
87.15 utilization project land" means land that is leased by the state
87.16 from the United States through the United States Secretary of
87.17 Agriculture according to Title III of the Bankhead Jones Farm
87.18 Tenant Act and that is administered by the commissioner.
87.19 [EFFECTIVE DATE.] This section is effective for aids paid
87.20 in calendar year 2005 and thereafter.
87.21 Sec. 33. Minnesota Statutes 2002, section 477A.12,
87.22 subdivision 1, is amended to read:
87.23 Subdivision 1. [TYPES OF LAND; PAYMENTS.] (a) As an offset
87.24 for expenses incurred by counties and towns in support of
87.25 natural resources lands, the following amounts are annually
87.26 appropriated to the commissioner of natural resources from the
87.27 general fund for transfer to the commissioner of revenue. The
87.28 commissioner of revenue shall pay the transferred funds to
87.29 counties as required by sections 477A.11 to 477A.145. The
87.30 amounts are:
87.31 (1) for acquired natural resources land, $3, as adjusted
87.32 for inflation under section 477A.145, multiplied by the total
87.33 number of acres of acquired natural resources land or, at the
87.34 county's option three-fourths of one percent of the appraised
87.35 value of all acquired natural resources land in the county,
87.36 whichever is greater;
88.1 (2) 75 cents, as adjusted for inflation under section
88.2 477A.145, multiplied by the number of acres of
88.3 county-administered other natural resources land; and
88.4 (3) 75 cents, as adjusted for inflation under section
88.5 477A.145, multiplied by the total number of acres of land
88.6 utilization project land;
88.7 (3) (4) 37.5 cents, as adjusted for inflation under section
88.8 477A.145, multiplied by the number of acres of
88.9 commissioner-administered other natural resources land located
88.10 in each county as of July 1 of each year prior to the payment
88.11 year.
88.12 (b) The amount determined under paragraph (a), clause (1),
88.13 is payable for land that is acquired from a private owner and
88.14 owned by the Department of Transportation for the purpose of
88.15 replacing wetland losses caused by transportation projects, but
88.16 only if the county contains more than 500 acres of such land at
88.17 the time the certification is made under subdivision 2.
88.18 [EFFECTIVE DATE.] This section is effective for aids paid
88.19 in calendar year 2005 and thereafter.
88.20 Sec. 34. Minnesota Statutes 2002, section 477A.12,
88.21 subdivision 2, is amended to read:
88.22 Subd. 2. [PROCEDURE.] Lands for which payments in lieu are
88.23 made pursuant to section 97A.061, subdivision 3, and Laws 1973,
88.24 chapter 567, shall not be eligible for payments under this
88.25 section. Each county auditor shall certify to the Department of
88.26 Natural Resources during July of each year prior to the payment
88.27 year the number of acres of county-administered other natural
88.28 resources land within the county. The Department of Natural
88.29 resources may, in addition to the certification of acreage,
88.30 require descriptive lists of land so certified. The
88.31 commissioner of natural resources shall determine and certify to
88.32 the commissioner of revenue by March 1 of the payment year:
88.33 (1) the number of acres and most recent appraised value of
88.34 acquired natural resources land within each county;
88.35 (2) the number of acres of commissioner-administered
88.36 natural resources land within each county; and
89.1 (3) the number of acres of county-administered other
89.2 natural resources land within each county, based on the reports
89.3 filed by each county auditor with the commissioner of natural
89.4 resources; and
89.5 (4) the number of acres of land utilization project land
89.6 within each county.
89.7 The commissioner of transportation shall determine and
89.8 certify to the commissioner of revenue by March 1 of the payment
89.9 year the number of acres of land and the appraised value of the
89.10 land described in subdivision 1, paragraph (b), but only if it
89.11 exceeds 500 acres.
89.12 The commissioner of revenue shall determine the
89.13 distributions provided for in this section using the number of
89.14 acres and appraised values certified by the commissioner of
89.15 natural resources and the commissioner of transportation by
89.16 March 1 of the payment year.
89.17 [EFFECTIVE DATE.] This section is effective for aids paid
89.18 in calendar year 2005 and thereafter.
89.19 Sec. 35. Minnesota Statutes 2002, section 477A.14,
89.20 subdivision 1, is amended to read:
89.21 Subdivision 1. [GENERAL DISTRIBUTION.] Except as provided
89.22 in subdivision 2 or in section 97A.061, subdivision 5, 40
89.23 percent of the total payment to the county shall be deposited in
89.24 the county general revenue fund to be used to provide property
89.25 tax levy reduction. The remainder shall be distributed by the
89.26 county in the following priority:
89.27 (a) 37.5 cents, as adjusted for inflation under section
89.28 477A.145, for each acre of county-administered other natural
89.29 resources land shall be deposited in a resource development fund
89.30 to be created within the county treasury for use in resource
89.31 development, forest management, game and fish habitat
89.32 improvement, and recreational development and maintenance of
89.33 county-administered other natural resources land. Any county
89.34 receiving less than $5,000 annually for the resource development
89.35 fund may elect to deposit that amount in the county general
89.36 revenue fund;
90.1 (b) From the funds remaining, within 30 days of receipt of
90.2 the payment to the county, the county treasurer shall pay each
90.3 organized township 30 cents, as adjusted for inflation under
90.4 section 477A.145, for each acre of acquired natural resources
90.5 land and each acre of land described in section 477A.12,
90.6 subdivision 1, paragraph (b), and 7.5 cents, as adjusted for
90.7 inflation under section 477A.145, for each acre of other natural
90.8 resources land and each acre of land utilization project land
90.9 located within its boundaries. Payments for natural resources
90.10 lands not located in an organized township shall be deposited in
90.11 the county general revenue fund. Payments to counties and
90.12 townships pursuant to this paragraph shall be used to provide
90.13 property tax levy reduction, except that of the payments for
90.14 natural resources lands not located in an organized township,
90.15 the county may allocate the amount determined to be necessary
90.16 for maintenance of roads in unorganized townships. Provided
90.17 that, if the total payment to the county pursuant to section
90.18 477A.12 is not sufficient to fully fund the distribution
90.19 provided for in this clause, the amount available shall be
90.20 distributed to each township and the county general revenue fund
90.21 on a pro rata basis; and
90.22 (c) Any remaining funds shall be deposited in the county
90.23 general revenue fund. Provided that, if the distribution to the
90.24 county general revenue fund exceeds $35,000, the excess shall be
90.25 used to provide property tax levy reduction.
90.26 [EFFECTIVE DATE.] This section is effective for aids paid
90.27 in calendar year 2005 and thereafter.
90.28 Sec. 36. Laws 1998, chapter 389, article 3, section 41, is
90.29 amended to read:
90.30 Sec. 41. [SPECIAL ASSESSMENT DEFERRAL AUTHORIZED.]
90.31 Notwithstanding Minnesota Statutes, chapter 429, a city may
90.32 defer the payment of any special assessment levied against a
90.33 property qualifying under section 38 as determined by the city.
90.34 Any special assessment, the payment of which has been deferred
90.35 by the city, must be paid in full or a payment agreement may be
90.36 approved by the city if the ownership of property is transferred
91.1 to anyone or any entity. Payment or a payment agreement must be
91.2 made within 60 days of the transfer of ownership.
91.3 [EFFECTIVE DATE.] This section is effective the day
91.4 following final enactment.
91.5 Sec. 37. Laws 1998, chapter 389, article 3, section 42,
91.6 subdivision 2, as amended by Laws 2002, chapter 377, article 4,
91.7 section 24, is amended to read:
91.8 Subd. 2. [RECAPTURE.] (a) Property or any portion thereof
91.9 qualifying under section 38 is subject to additional taxes if:
91.10 (1) ownership of the property is transferred to anyone
91.11 other than the spouse or child of the current owner;
91.12 (2) the current owner or the spouse or child of the current
91.13 owner has not conveyed or entered into a contract before July 1,
91.14 2007, to convey for ownership or public easement rights, (i) a
91.15 portion of the property to a one or more nonprofit foundation
91.16 foundations or corporation operating corporations; and (ii) a
91.17 portion of the property to one or more local governments; and
91.18 those entities shall separately or jointly operate the property
91.19 as an art park providing the services included in section 38,
91.20 clauses (2) to (5), and may also use some of the property for
91.21 other public purposes as determined by the local governments; or
91.22 (3) the nonprofit foundation or corporation to which a
91.23 portion of the property was transferred ceases to provide the
91.24 services included in section 38, clauses (2) to (5), earlier
91.25 than ten years following the effective date of the conveyance
91.26 conveyances or of the execution of the contract contracts to
91.27 convey.
91.28 (b) The additional taxes are imposed at the earlier of (1)
91.29 the year following transfer of ownership to anyone other than
91.30 the spouse or child of the current owner or a nonprofit
91.31 foundation or corporation or local government operating the
91.32 property as an art park and used for other public purposes, or
91.33 (2) for taxes payable in 2008, or (3) in the event the nonprofit
91.34 foundation or corporation to which a portion of the property was
91.35 conveyed ceases to provide the required services within ten
91.36 years after the conveyance, for taxes payable in the year
92.1 following the year when it ceased to do so.
92.2 The county board, with the approval of the city council,
92.3 shall determine the amount of the additional taxes due on the
92.4 portion of property which is no longer utilized as an art park;
92.5 provided, however, that the additional taxes are equal to must
92.6 not be greater than the difference between the taxes determined
92.7 on that portion of the property utilized as an art park under
92.8 sections 39 and 40 and the amount determined under subdivision 1
92.9 for all years that the property qualified under section 38. The
92.10 additional taxes must be extended against the property on the
92.11 tax list for the current year; provided, however, that No
92.12 interest or penalties may be levied on the additional taxes if
92.13 timely paid amount provided that it is paid within 30 days of
92.14 the county's notice.
92.15 [EFFECTIVE DATE.] This section is effective the day
92.16 following final enactment.
92.17 Sec. 38. [TOWNSHIP LEVY ADJUSTMENT FOR WIND ENERGY
92.18 PRODUCTION TAX; PAYABLE 2004 ONLY.]
92.19 Notwithstanding the deadlines in Minnesota Statutes,
92.20 section 275.07, towns located in Lincoln or Pipestone County are
92.21 authorized to adjust their payable 2004 levy for all or a
92.22 portion of their estimated wind energy production tax amounts
92.23 for 2004, as computed by the commissioner of revenue from
92.24 reports filed under Minnesota Statutes, section 272.029,
92.25 subdivision 4. The Lincoln and Pipestone county auditors may
92.26 adjust the payable 2004 levy certifications under Minnesota
92.27 Statutes, section 275.07, subdivision 1, based upon the towns
92.28 that have recertified their levies under this section by March
92.29 15, 2004.
92.30 [EFFECTIVE DATE.] This section is effective for taxes
92.31 levied in 2003, payable in 2004 only.
92.32 Sec. 39. [SAUK RIVER WATERSHED DISTRICT.]
92.33 Notwithstanding Minnesota Statutes, section 103D.905,
92.34 subdivision 3, the Sauk River Watershed District may annually
92.35 levy an additional amount up to $100,000 for its general fund.
92.36 [EFFECTIVE DATE.] This section is effective, without local
93.1 approval, beginning with the taxes levied in 2004, payable in
93.2 2005.
93.3 Sec. 40. [PRINSBURG; SPECIAL LEVY AUTHORITY.]
93.4 Subdivision 1. [BOARD APPROVAL.] Notwithstanding any law
93.5 to the contrary, the board of Common School District No. 815,
93.6 Prinsburg, may continue to operate as a common school district
93.7 provided that:
93.8 (1) the district adopts an annual resolution by May 1 of
93.9 each year declaring that it will be operating for the following
93.10 school year;
93.11 (2) for fiscal years 2006 and later, the district's
93.12 proposed budget for the following year shows that the district
93.13 will not return to statutory operating debt under Minnesota
93.14 Statutes, section 123B.81; and
93.15 (3) the district has passed a referendum under subdivision
93.16 4 authorizing levy authority for the coming school year.
93.17 Subd. 2. [DETERMINATION OF OUTSTANDING OBLIGATIONS.] Prior
93.18 to exercising the authority to levy under this section, the
93.19 boards of Common School District No. 815 and Independent School
93.20 District No. 2180, MACCRAY, must mutually agree to the amount of
93.21 the outstanding tuition owed by the Prinsburg School District to
93.22 the MACCRAY School District. If the districts cannot agree to
93.23 the amount of the tuition owed, the districts may submit all
93.24 relevant information to the commissioner of education who shall
93.25 determine the amount of the obligation owed to the MACCRAY
93.26 School District.
93.27 Subd. 3. [STATUTORY OPERATING DEBT.] For taxes payable in
93.28 2005, 2006, and 2007, Common School District No. 815, Prinsburg,
93.29 may levy the amount necessary to eliminate a deficit in the net
93.30 unappropriated balance in the operating funds of the district,
93.31 determined as of June 30, 2004, and certified and adjusted by
93.32 the commissioner. This levy may also include the amount
93.33 necessary to eliminate the estimated deficit for fiscal year
93.34 2005.
93.35 Subd. 4. [ANNUAL LEVY AUTHORITY.] (a) Common School
93.36 District No. 815, Prinsburg, may levy the amount necessary to
94.1 eliminate any projected deficit in the district's operating
94.2 budget for the preceding school year, excluding the amounts
94.3 raised by this subdivision, if the district's voters approve a
94.4 referendum according to the provisions of this subdivision.
94.5 (b) The referendum shall be called by the school board.
94.6 The ballot must state that the annual levy will be the estimated
94.7 amount necessary to eliminate the previous year's estimated
94.8 operating deficit. The ballot must designate the specific
94.9 number of years, not to exceed five, for which the referendum
94.10 authorization applies. The ballot shall state substantially the
94.11 following:
94.12 "Shall the increase in the levy proposed by the Board of
94.13 Prinsburg, Common School District No. 815, be approved?"
94.14 If approved, the amount necessary to eliminate the previous
94.15 year's estimated operating deficit may be authorized for
94.16 certification for the number of years approved.
94.17 (c) The board must follow the notice provisions of
94.18 Minnesota Statutes, section 126C.17.
94.19 (d) This levy is not subject to the property tax
94.20 recognition shift under Minnesota Statutes, sections 123B.75,
94.21 subdivision 5, and 127A.441.
94.22 Subd. 5. [FISCAL YEAR 2005 ONLY.] Notwithstanding the
94.23 provisions of this section, for fiscal year 2005 only, Common
94.24 School District No. 815, Prinsburg, may continue to operate as a
94.25 common school district upon approval of a referendum under
94.26 subdivision 4.
94.27 [EFFECTIVE DATE.] This section is effective the day
94.28 following final enactment.
94.29 Sec. 41. [STUDY OF PROPERTY TAX AS A PERCENTAGE OF RENT.]
94.30 (a) The commissioner of revenue shall study the percentage
94.31 of rent that constitutes property tax used to calculate refunds
94.32 under Minnesota Statutes, chapter 290A, and provide a written
94.33 report and recommendations to the legislature, in compliance
94.34 with Minnesota Statutes, sections 3.195 and 3.197, by February
94.35 1, 2005. In preparing the study, the commissioner must conduct
94.36 a survey of rent paid and property taxes payable on samples of
95.1 rental properties in (i) the metropolitan area as defined in
95.2 Minnesota Statutes, section 473.121, subdivision 2, (ii) each
95.3 remaining county that is included in a metropolitan statistical
95.4 area as defined by the U.S. Census Bureau, and (iii) the
95.5 remaining Minnesota counties. The survey must include rental
95.6 properties classified under Minnesota Statutes, section 273.13,
95.7 subdivisions 22 and 25, paragraphs (a) and (c), and rental
95.8 property that is exempt from taxation.
95.9 (b) The study must report on:
95.10 (1) the percentage of rent constituting property tax for
95.11 the different types of property and different geographic regions
95.12 surveyed; and
95.13 (2) if rent paid in each geographic region surveyed differs
95.14 significantly between rental units subject to different
95.15 classifications and units in buildings exempt from taxation.
95.16 (c) The study must make recommendations on:
95.17 (1) if the percentage of rent constituting property taxes
95.18 specified in Minnesota Statutes, section 290A.03, subdivisions
95.19 11 and 13, should be changed to more accurately reflect the
95.20 actual percentage of rent constituting property taxes throughout
95.21 Minnesota;
95.22 (2) if the percentage of rent constituting property taxes
95.23 used to calculate refunds under Minnesota Statutes, chapter
95.24 290A, should be set at one uniform percentage for the entire
95.25 state or should vary by geographic region and type of rental
95.26 property, including an analysis of the advantages and
95.27 disadvantages of using a uniform rate or varying the rate by
95.28 region and type of property;
95.29 (3) if the percentage of rent constituting property tax
95.30 should be replaced by reporting of actual property taxes on
95.31 rental units;
95.32 (4) a method by which the commissioner could regularly
95.33 recommend to the legislature adjustments to the percentage of
95.34 rent constituting property taxes; and
95.35 (5) proposed statutory language authorizing the
95.36 commissioner to adjust the percentage based on ongoing survey
96.1 research.
96.2 ARTICLE 4
96.3 SALES AND USE AND LODGING TAXES
96.4 Section 1. Minnesota Statutes 2002, section 16C.03, is
96.5 amended by adding a subdivision to read:
96.6 Subd. 18. [CONTRACTS WITH FOREIGN VENDORS.] (a) The
96.7 commissioner and other agencies to which this section applies
96.8 and the legislative branch of government shall not contract for
96.9 goods or services from a vendor or an affiliate of the vendor
96.10 which has not registered to collect the sales and use tax
96.11 imposed under chapter 297A on its sales in Minnesota or to a
96.12 destination in Minnesota. A vendor that sells tangible personal
96.13 property or provides services subject to tax under chapter 297A
96.14 to an agency or the legislature, and each affiliate of that
96.15 vendor, is regarded as a "retailer maintaining a place of
96.16 business in this state" and is required to collect the Minnesota
96.17 sales or use tax under chapter 297A. This subdivision does not
96.18 apply to state colleges and universities, the courts, and any
96.19 agency in the judicial branch of government. For purposes of
96.20 this subdivision, the term "affiliate" means any person or
96.21 entity that is controlled by, or is under common control of, a
96.22 vendor through stock ownership or other affiliation.
96.23 (b) Beginning on or after January 1, 2005, each vendor or
96.24 affiliate of a vendor that is offered a contract to sell goods
96.25 or services subject to tax under chapter 297A to an agency or
96.26 the legislature must submit to the agency or legislature
96.27 certification that the vendor is registered to collect Minnesota
96.28 sales or use tax and acknowledging that the contract may be
96.29 declared void if the certification is false.
96.30 (c) An agency or the legislature is exempted from the
96.31 provisions of this subdivision in the event of an emergency or
96.32 when the vendor is the sole source of such goods or services.
96.33 [EFFECTIVE DATE.] This section is effective for all
96.34 contracts entered into after December 31, 2004.
96.35 Sec. 2. Minnesota Statutes 2002, section 297A.61,
96.36 subdivision 4, is amended to read:
97.1 Subd. 4. [RETAIL SALE.] (a) A "retail sale" means any
97.2 sale, lease, or rental for any purpose other than resale,
97.3 sublease, or subrent.
97.4 (b) A sale of property used by the owner only by leasing it
97.5 to others or by holding it in an effort to lease it, and put to
97.6 no use by the owner other than resale after the lease or effort
97.7 to lease, is a sale of property for resale.
97.8 (c) A sale of master computer software that is purchased
97.9 and used to make copies for sale or lease is a sale of property
97.10 for resale.
97.11 (d) A sale of building materials, supplies, and equipment
97.12 to owners, contractors, subcontractors, or builders for the
97.13 erection of buildings or the alteration, repair, or improvement
97.14 of real property is a retail sale in whatever quantity sold,
97.15 whether the sale is for purposes of resale in the form of real
97.16 property or otherwise.
97.17 (e) A sale of carpeting, linoleum, or similar floor
97.18 covering to a person who provides for installation of the floor
97.19 covering is a retail sale and not a sale for resale since a sale
97.20 of floor covering which includes installation is a contract for
97.21 the improvement of real property.
97.22 (f) A sale of shrubbery, plants, sod, trees, and similar
97.23 items to a person who provides for installation of the items is
97.24 a retail sale and not a sale for resale since a sale of
97.25 shrubbery, plants, sod, trees, and similar items that includes
97.26 installation is a contract for the improvement of real property.
97.27 (g) A sale of tangible personal property that is awarded as
97.28 prizes is a retail sale and is not considered a sale of property
97.29 for resale.
97.30 (h) A sale of tangible personal property utilized or
97.31 employed in the furnishing or providing of services under
97.32 subdivision 3, paragraph (g), clause (1), including, but not
97.33 limited to, property given as promotional items, is a retail
97.34 sale and is not considered a sale of property for resale.
97.35 (i) A sale of tangible personal property used in conducting
97.36 lawful gambling under chapter 349 or the state lottery under
98.1 chapter 349A, including, but not limited to, property given as
98.2 promotional items, is a retail sale and is not considered a sale
98.3 of property for resale.
98.4 (j) A sale of machines, equipment, or devices that are used
98.5 to furnish, provide, or dispense goods or services, including,
98.6 but not limited to, coin-operated devices, is a retail sale and
98.7 is not considered a sale of property for resale.
98.8 (k) In the case of a lease, a retail sale occurs when (1)
98.9 an obligation to make a lease payment becomes due under the
98.10 terms of the agreement or the trade practices of the lessor or
98.11 (2) in the case of a lease of a motor vehicle, as defined in
98.12 section 297B.01, subdivision 5, but excluding vehicles with a
98.13 manufacturer's gross vehicle weight rating greater than 10,000
98.14 pounds and rentals of vehicles for not more than 28 days, at the
98.15 time the least is consummated.
98.16 (l) In the case of a conditional sales contract, a retail
98.17 sale occurs upon the transfer of title or possession of the
98.18 tangible personal property.
98.19 [EFFECTIVE DATE.] This section is effective for leases
98.20 entered into after June 30, 2004.
98.21 Sec. 3. Minnesota Statutes 2002, section 297A.61, is
98.22 amended by adding a subdivision to read:
98.23 Subd. 7a. [MOTOR VEHICLE LEASE PRICE.] In the case of a
98.24 lease of a motor vehicle as provided in subdivision 4, paragraph
98.25 (k), clause (2), the tax is imposed on the total amount to be
98.26 paid by the lessee under the lease agreement. The tax shall be
98.27 collected in full by the lessor at the time the lease is
98.28 consummated or, if the tax is included in the lease and the
98.29 lease is assigned, the tax shall be due from the original lessor
98.30 at the time the lease is assigned. The total amount to be paid
98.31 by the lessee under the lease agreement equals the agreed upon
98.32 value of the vehicle less manufacturer's rebates, the stated
98.33 residual value of the leased vehicle, and the total value
98.34 allowed for a vehicle owned by the lessee taken in trade by
98.35 lessor, plus the price of any taxable goods and services
98.36 included in the lease and the rent charge as provided by Code of
99.1 Federal Regulations, title 12, section 213.4, excluding any rent
99.2 charge related to the capitalization of the tax.
99.3 If the total amount paid by the lessee for use of the
99.4 leased vehicle includes amounts that are not calculated at the
99.5 time the lease is executed, the tax is imposed and shall be
99.6 collected by the lessor at the time such amounts are paid by the
99.7 lessee. In the case of a lease which by its terms may be
99.8 renewed, the sales tax is due and payable on the total amount to
99.9 be paid during the initial term of the lease, and then for each
99.10 subsequent renewal period on the total amount to be paid during
99.11 the renewal period.
99.12 If a lease is canceled or rescinded on or before 90 days of
99.13 its consummation or in cases where a vehicle is returned to the
99.14 manufacturer pursuant to section 325F.665, the lessor may file a
99.15 claim for a refund of the total tax paid minus the amount of tax
99.16 due for the period the vehicle is used by the lessee.
99.17 [EFFECTIVE DATE.] This section is effective for leases
99.18 entered into after June 30, 2004.
99.19 Sec. 4. Minnesota Statutes 2002, section 297A.61, is
99.20 amended by adding a subdivision to read:
99.21 Subd. 37. [PERSONAL RAPID TRANSIT SYSTEM.] "Personal rapid
99.22 transit system" means a transportation system:
99.23 (1) of small, computer-controlled vehicles, transporting
99.24 one to three passengers on elevated guideways in a
99.25 transportation network operating on demand and nonstop directly
99.26 to any stations in the network;
99.27 (2) that provides service to the public on a regular and
99.28 continuing basis; and
99.29 (3) that is operated independent of any governmental
99.30 subsidies, other than reduced borrowing or capital costs from
99.31 the issuing of state or local bonds, direct loans, loan
99.32 guarantees, or similar financial assistance provided by a
99.33 governmental entity to finance acquisition, construction, or
99.34 improvement of the system.
99.35 [EFFECTIVE DATE.] This section is effective the day
99.36 following final enactment.
100.1 Sec. 5. Minnesota Statutes 2002, section 297A.62, is
100.2 amended by adding a subdivision to read:
100.3 Subd. 4. [LEASE OF MOTOR VEHICLES.] When the lease of a
100.4 motor vehicle as defined in section 297A.61, subdivision 4,
100.5 paragraph (k), clause (2), originates in another state, the
100.6 sales tax under subdivision 1 shall be calculated by the lessor
100.7 on the total amount that is due under the lease agreement after
100.8 the vehicle is required to be registered in Minnesota. If the
100.9 total amount to be paid by the lessee under the lease agreement
100.10 has already been subjected to tax by another state, a credit for
100.11 taxes paid in the other state shall be allowed as provided in
100.12 section 297A.80.
100.13 [EFFECTIVE DATE.] This section is effective for vehicles
100.14 registering in Minnesota after June 30, 2004.
100.15 Sec. 6. Minnesota Statutes 2002, section 297A.67, is
100.16 amended by adding a subdivision to read:
100.17 Subd. 32. [CIGARETTES.] Cigarettes upon which a tax has
100.18 been imposed under section 297F.25 are exempt.
100.19 [EFFECTIVE DATE.] This section is effective for sales and
100.20 purchases made after July 31, 2004.
100.21 Sec. 7. Minnesota Statutes 2003 Supplement, section
100.22 297A.68, subdivision 2, is amended to read:
100.23 Subd. 2. [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.]
100.24 (a) Materials stored, used, or consumed in industrial production
100.25 of personal property intended to be sold ultimately at retail
100.26 are exempt, whether or not the item so used becomes an
100.27 ingredient or constituent part of the property produced.
100.28 Materials that qualify for this exemption include, but are not
100.29 limited to, the following:
100.30 (1) chemicals, including chemicals used for cleaning food
100.31 processing machinery and equipment;
100.32 (2) materials, including chemicals, fuels, and electricity
100.33 purchased by persons engaged in industrial production to treat
100.34 waste generated as a result of the production process;
100.35 (3) fuels, electricity, gas, and steam used or consumed in
100.36 the production process, except that electricity, gas, or steam
101.1 used for space heating, cooling, or lighting is exempt if (i) it
101.2 is in excess of the average climate control or lighting for the
101.3 production area, and (ii) it is necessary to produce that
101.4 particular product;
101.5 (4) petroleum products and lubricants;
101.6 (5) packaging materials, including returnable containers
101.7 used in packaging food and beverage products;
101.8 (6) accessory tools, equipment, and other items that are
101.9 separate detachable units with an ordinary useful life of less
101.10 than 12 months used in producing a direct effect upon the
101.11 product; and
101.12 (7) the following materials, tools, and equipment used in
101.13 metalcasting: crucibles, thermocouple protection sheaths and
101.14 tubes, stalk tubes, refractory materials, molten metal filters
101.15 and filter boxes, degassing lances, and base blocks.
101.16 (b) This exemption does not include:
101.17 (1) machinery, equipment, implements, tools, accessories,
101.18 appliances, contrivances and furniture and fixtures, except
101.19 those listed in paragraph (a), clause (6); and
101.20 (2) petroleum and special fuels used in producing or
101.21 generating power for propelling ready-mixed concrete trucks on
101.22 the public highways of this state.
101.23 (c) Industrial production includes, but is not limited to,
101.24 research, development, design or production of any tangible
101.25 personal property, manufacturing, processing (other than by
101.26 restaurants and consumers) of agricultural products (whether
101.27 vegetable or animal), commercial fishing, refining, smelting,
101.28 reducing, brewing, distilling, printing, mining, quarrying,
101.29 lumbering, generating electricity, the production of road
101.30 building materials, and the research, development, design, or
101.31 production of computer software. Industrial production does not
101.32 include painting, cleaning, repairing or similar processing of
101.33 property except as part of the original manufacturing process.
101.34 Industrial production does not include the transportation,
101.35 transmission, or distribution of petroleum, liquefied gas,
101.36 natural gas, water, or steam, in, by, or through pipes, lines,
102.1 tanks, mains, or other means of transporting those products,
102.2 except transportation, transmission, and distribution do not
102.3 include blending of petroleum or biodiesel fuel, as defined in
102.4 section 239.77.
102.5 [EFFECTIVE DATE.] This section is effective for sales and
102.6 purchases made after June 30, 2004.
102.7 Sec. 8. Minnesota Statutes 2003 Supplement, section
102.8 297A.68, subdivision 5, is amended to read:
102.9 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is
102.10 exempt. The tax must be imposed and collected as if the rate
102.11 under section 297A.62, subdivision 1, applied, and then refunded
102.12 in the manner provided in section 297A.75.
102.13 "Capital equipment" means machinery and equipment purchased
102.14 or leased, and used in this state by the purchaser or lessee
102.15 primarily for manufacturing, fabricating, mining, or refining
102.16 tangible personal property to be sold ultimately at retail if
102.17 the machinery and equipment are essential to the integrated
102.18 production process of manufacturing, fabricating, mining, or
102.19 refining. Capital equipment also includes machinery and
102.20 equipment used to electronically transmit results retrieved by a
102.21 customer of an on-line computerized data retrieval system.
102.22 (b) Capital equipment includes, but is not limited to:
102.23 (1) machinery and equipment used to operate, control, or
102.24 regulate the production equipment;
102.25 (2) machinery and equipment used for research and
102.26 development, design, quality control, and testing activities;
102.27 (3) environmental control devices that are used to maintain
102.28 conditions such as temperature, humidity, light, or air pressure
102.29 when those conditions are essential to and are part of the
102.30 production process;
102.31 (4) materials and supplies used to construct and install
102.32 machinery or equipment;
102.33 (5) repair and replacement parts, including accessories,
102.34 whether purchased as spare parts, repair parts, or as upgrades
102.35 or modifications to machinery or equipment;
102.36 (6) materials used for foundations that support machinery
103.1 or equipment;
103.2 (7) materials used to construct and install special purpose
103.3 buildings used in the production process;
103.4 (8) ready-mixed concrete equipment in which the ready-mixed
103.5 concrete is mixed as part of the delivery process regardless if
103.6 mounted on a chassis and leases of ready-mixed concrete trucks;
103.7 and
103.8 (9) machinery or equipment used for research, development,
103.9 design, or production of computer software.
103.10 (c) Capital equipment does not include the following:
103.11 (1) motor vehicles taxed under chapter 297B;
103.12 (2) machinery or equipment used to receive or store raw
103.13 materials;
103.14 (3) building materials, except for materials included in
103.15 paragraph (b), clauses (6) and (7);
103.16 (4) machinery or equipment used for nonproduction purposes,
103.17 including, but not limited to, the following: plant security,
103.18 fire prevention, first aid, and hospital stations; support
103.19 operations or administration; pollution control; and plant
103.20 cleaning, disposal of scrap and waste, plant communications,
103.21 space heating, cooling, lighting, or safety;
103.22 (5) farm machinery and aquaculture production equipment as
103.23 defined by section 297A.61, subdivisions 12 and 13;
103.24 (6) machinery or equipment purchased and installed by a
103.25 contractor as part of an improvement to real property; or
103.26 (7) machinery or equipment used in the transportation,
103.27 transmission, or distribution of petroleum, liquefied gas,
103.28 natural gas, water, or steam, in, by, or through pipes, lines,
103.29 tanks, mains, or other means of transporting those products.
103.30 This clause does not apply to machinery and equipment used to
103.31 blend petroleum or biodiesel fuel, as defined in section 239.77;
103.32 or
103.33 (8) any other item that is not essential to the integrated
103.34 process of manufacturing, fabricating, mining, or refining.
103.35 (d) For purposes of this subdivision:
103.36 (1) "Equipment" means independent devices or tools separate
104.1 from machinery but essential to an integrated production
104.2 process, including computers and computer software, used in
104.3 operating, controlling, or regulating machinery and equipment;
104.4 and any subunit or assembly comprising a component of any
104.5 machinery or accessory or attachment parts of machinery, such as
104.6 tools, dies, jigs, patterns, and molds.
104.7 (2) "Fabricating" means to make, build, create, produce, or
104.8 assemble components or property to work in a new or different
104.9 manner.
104.10 (3) "Integrated production process" means a process or
104.11 series of operations through which tangible personal property is
104.12 manufactured, fabricated, mined, or refined. For purposes of
104.13 this clause, (i) manufacturing begins with the removal of raw
104.14 materials from inventory and ends when the last process prior to
104.15 loading for shipment has been completed; (ii) fabricating begins
104.16 with the removal from storage or inventory of the property to be
104.17 assembled, processed, altered, or modified and ends with the
104.18 creation or production of the new or changed product; (iii)
104.19 mining begins with the removal of overburden from the site of
104.20 the ores, minerals, stone, peat deposit, or surface materials
104.21 and ends when the last process before stockpiling is completed;
104.22 and (iv) refining begins with the removal from inventory or
104.23 storage of a natural resource and ends with the conversion of
104.24 the item to its completed form.
104.25 (4) "Machinery" means mechanical, electronic, or electrical
104.26 devices, including computers and computer software, that are
104.27 purchased or constructed to be used for the activities set forth
104.28 in paragraph (a), beginning with the removal of raw materials
104.29 from inventory through completion of the product, including
104.30 packaging of the product.
104.31 (5) "Machinery and equipment used for pollution control"
104.32 means machinery and equipment used solely to eliminate, prevent,
104.33 or reduce pollution resulting from an activity described in
104.34 paragraph (a).
104.35 (6) "Manufacturing" means an operation or series of
104.36 operations where raw materials are changed in form, composition,
105.1 or condition by machinery and equipment and which results in the
105.2 production of a new article of tangible personal property. For
105.3 purposes of this subdivision, "manufacturing" includes the
105.4 generation of electricity or steam to be sold at retail.
105.5 (7) "Mining" means the extraction of minerals, ores, stone,
105.6 or peat.
105.7 (8) "On-line data retrieval system" means a system whose
105.8 cumulation of information is equally available and accessible to
105.9 all its customers.
105.10 (9) "Primarily" means machinery and equipment used 50
105.11 percent or more of the time in an activity described in
105.12 paragraph (a).
105.13 (10) "Refining" means the process of converting a natural
105.14 resource to an intermediate or finished product, including the
105.15 treatment of water to be sold at retail.
105.16 [EFFECTIVE DATE.] This section is effective for sales and
105.17 purchases made after June 30, 2004.
105.18 Sec. 9. Minnesota Statutes 2002, section 297A.68, is
105.19 amended by adding a subdivision to read:
105.20 Subd. 40. [PERSONAL RAPID TRANSIT SYSTEM.] (a) Machinery,
105.21 equipment, and supplies purchased or leased, and used by the
105.22 purchaser or lessee in this state directly in the provision of a
105.23 personal rapid transit system as defined in section 297A.61,
105.24 subdivision 37, are exempt. Machinery, equipment, and supplies
105.25 that qualify for this exemption include, but are not limited to,
105.26 the following:
105.27 (1) vehicles, guideways, and related parts used directly in
105.28 the transit system;
105.29 (2) computers and equipment used primarily for operating,
105.30 controlling, and regulating the system;
105.31 (3) machinery, equipment, furniture, and fixtures necessary
105.32 for the functioning of system stations;
105.33 (4) machinery, equipment, implements, tools, and supplies
105.34 used to maintain vehicles, guideways, and stations; and
105.35 (5) electricity and other fuels used in the provision of
105.36 the transit service, including heating, cooling, and lighting of
106.1 system stations.
106.2 (b) This exemption does not include machinery, equipment,
106.3 and supplies used for nonproduction purposes such as operations
106.4 support and administration.
106.5 (c) This subdivision expires three years after completion
106.6 of a public safety certification and training facility.
106.7 [EFFECTIVE DATE.] This section is effective for sales and
106.8 purchases made after June 30, 2004.
106.9 Sec. 10. Minnesota Statutes 2003 Supplement, section
106.10 297A.70, subdivision 8, is amended to read:
106.11 Subd. 8. [REGIONWIDE PUBLIC SAFETY RADIO COMMUNICATION
106.12 SYSTEM; PRODUCTS AND SERVICES.] Products and services including,
106.13 but not limited to, end user equipment used for construction,
106.14 ownership, operation, maintenance, and enhancement of the
106.15 backbone system of the regionwide or statewide public safety
106.16 radio communication system established under sections 403.21 to
106.17 403.34, are exempt. For purposes of this subdivision, backbone
106.18 system is defined in section 403.21, subdivision 9. This
106.19 subdivision is effective for purchases, sales, storage, use, or
106.20 consumption occurring before August 1, 2005, in the counties of
106.21 Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and
106.22 Washington Benton, Sherburne, Stearns, and Wright, and all
106.23 counties located in the west metro, east metro, and southeast
106.24 districts of the State Patrol.
106.25 [EFFECTIVE DATE.] This section is effective for sales made
106.26 beginning the day after final enactment.
106.27 Sec. 11. Minnesota Statutes 2002, section 297A.70, is
106.28 amended by adding a subdivision to read:
106.29 Subd. 17. [DONATED MEALS.] Meals that are normally sold at
106.30 retail in the ordinary business activities of the taxpayer are
106.31 exempt if the meals are donated to a nonprofit group as defined
106.32 in subdivision 4 for fund-raising purposes.
106.33 [EFFECTIVE DATE.] This section is effective for donations
106.34 made after June 30, 2004.
106.35 Sec. 12. Minnesota Statutes 2002, section 297A.71, is
106.36 amended by adding a subdivision to read:
107.1 Subd. 33. [PERSONAL RAPID TRANSIT SYSTEM.] Materials,
107.2 equipment, and supplies used in the construction, expansion, or
107.3 improvement of a personal rapid transit system as defined in
107.4 section 297A.61, subdivision 37.
107.5 [EFFECTIVE DATE.] This section is effective for sales and
107.6 purchases made after June 30, 2004.
107.7 Sec. 13. Minnesota Statutes 2002, section 297A.87,
107.8 subdivision 2, is amended to read:
107.9 Subd. 2. [SELLER'S PERMIT OR ALTERNATE STATEMENT.] (a) The
107.10 operator of an event under subdivision 1 shall obtain one of the
107.11 following from a person who wishes to do business as a seller at
107.12 the event:
107.13 (1) evidence that the person holds a valid seller's permit
107.14 under section 297A.84; or
107.15 (2) a written statement that the person is not offering for
107.16 sale any item that is taxable under this chapter; or
107.17 (3) a written statement that this is the only selling event
107.18 that the person will be participating in for that calendar year,
107.19 that the person will be participating for three or fewer days,
107.20 and that the person will make less than $500 in total sales at
107.21 the event. The written statement shall include the person's
107.22 name, address, and telephone number.
107.23 (b) The operator shall require the evidence or statement as
107.24 a prerequisite to participating in the event as a seller.
107.25 [EFFECTIVE DATE.] This section is effective for selling
107.26 events occurring after June 15, 2004.
107.27 Sec. 14. Minnesota Statutes 2002, section 297A.87,
107.28 subdivision 3, is amended to read:
107.29 Subd. 3. [OCCASIONAL SALE PROVISIONS NOT APPLICABLE UNDER
107.30 LIMITED CIRCUMSTANCES.] The isolated and occasional
107.31 sale provisions provision under section 297A.67, subdivision 23,
107.32 or applies, provided that the seller only participates for three
107.33 or fewer days in one event per calendar year, makes $500 or less
107.34 in sales at the event, and provides the written statement
107.35 required in subdivision 2, paragraph (a), clause (3). The
107.36 isolated and occasional sales provision under section 297A.68,
108.1 subdivision 25, do does not apply to a seller at an event under
108.2 this section.
108.3 [EFFECTIVE DATE.] This section is effective for selling
108.4 events occurring after June 15, 2004.
108.5 Sec. 15. Laws 1998, chapter 389, article 8, section 43,
108.6 subdivision 3, is amended to read:
108.7 Subd. 3. [USE OF REVENUES.] Revenues received from the
108.8 taxes authorized by subdivisions 1 and 2 must be used by the
108.9 city to pay for the cost of collecting and administering the
108.10 taxes and to pay for the following projects:
108.11 (1) transportation infrastructure improvements including
108.12 both highway and airport improvements;
108.13 (2) improvements to the civic center complex;
108.14 (3) a municipal water, sewer, and storm sewer project
108.15 necessary to improve regional ground water quality; and
108.16 (4) construction of a regional recreation and sports center
108.17 and associated other higher education facilities available for
108.18 both community and student use, located at or adjacent to the
108.19 Rochester center.
108.20 The total amount of capital expenditures or bonds for these
108.21 projects that may be paid from the revenues raised from the
108.22 taxes authorized in this section may not exceed $71,500,000.
108.23 The total amount of capital expenditures or bonds for the
108.24 project in clause (4) that may be paid from the revenues raised
108.25 from the taxes authorized in this section may not exceed
108.26 $20,000,000.
108.27 [EFFECTIVE DATE.] This section is effective the day after
108.28 the governing body of Rochester and its chief clerical officer
108.29 timely complete their compliance with Minnesota Statutes,
108.30 section 645.021, subdivisions 2 and 3.
108.31 Sec. 16. Laws 2002, chapter 377, article 3, section 4, the
108.32 effective date, is amended to read:
108.33 [EFFECTIVE DATE.] With the exception of clause (2), item
108.34 (ii), This section is effective for sales and purchases made
108.35 after June 30, 2002. Clause (2), item (ii), is effective for
108.36 sales and purchases made after June 30, 2002, and before January
109.1 1, 2006.
109.2 [EFFECTIVE DATE.] This section is effective the day
109.3 following final enactment.
109.4 ARTICLE 5
109.5 SPECIAL TAXES
109.6 Section 1. Minnesota Statutes 2002, section 295.582, is
109.7 amended to read:
109.8 295.582 [AUTHORITY.]
109.9 (a) A hospital, surgical center, or health care provider
109.10 that is subject to a tax under section 295.52, or a pharmacy
109.11 that has paid additional expense transferred under this section
109.12 by a wholesale drug distributor, may transfer additional expense
109.13 generated by section 295.52 obligations on to all third-party
109.14 contracts for the purchase of health care services on behalf of
109.15 a patient or consumer. The additional expense transferred to
109.16 the third-party purchaser must not exceed the tax percentage
109.17 specified in section 295.52 multiplied against the gross
109.18 revenues received under the third-party contract, and the tax
109.19 percentage specified in section 295.52 multiplied against
109.20 co-payments and deductibles paid by the individual patient or
109.21 consumer. The expense must not be generated on revenues derived
109.22 from payments that are excluded from the tax under section
109.23 295.53. All third-party purchasers of health care services
109.24 including, but not limited to, third-party purchasers regulated
109.25 under chapter 60A, 62A, 62C, 62D, 62H, 62N, 64B, 65A, 65B, 79,
109.26 or 79A, or under section 471.61 or 471.617, must pay the
109.27 transferred expense in addition to any payments due under
109.28 existing contracts with the hospital, surgical center, pharmacy,
109.29 or health care provider, to the extent allowed under federal
109.30 law. A third-party purchaser of health care services includes,
109.31 but is not limited to, a health carrier or community integrated
109.32 service network that pays for health care services on behalf of
109.33 patients or that reimburses, indemnifies, compensates, or
109.34 otherwise insures patients for health care services. A
109.35 third-party purchaser shall comply with this section regardless
109.36 of whether the third-party purchaser is a for-profit,
110.1 not-for-profit, or nonprofit entity or whether the health care
110.2 provider has chosen to itemize the tax on patient billings. A
110.3 wholesale drug distributor may transfer additional expense
110.4 generated by section 295.52 obligations to entities that
110.5 purchase from the wholesaler, and the entities must pay the
110.6 additional expense. Nothing in this section limits the ability
110.7 of a hospital, surgical center, pharmacy, wholesale drug
110.8 distributor, or health care provider to recover all or part of
110.9 the section 295.52 obligation by other methods, including
110.10 increasing fees or charges. If a provider elects to separately
110.11 itemize the tax on the patient's bill and collect the tax, a
110.12 third-party purchaser that has already incorporated the tax in
110.13 its calculation of the payment amount due to the provider may
110.14 deduct the additional itemized tax amount from the payment made
110.15 to the provider.
110.16 (b) Each third-party purchaser regulated under any chapter
110.17 cited in paragraph (a) shall include with its annual renewal for
110.18 certification of authority or licensure documentation indicating
110.19 compliance with paragraph (a).
110.20 (c) Any hospital, surgical center, or health care provider
110.21 subject to a tax under section 295.52 or a pharmacy that has
110.22 paid additional expense transferred under this section by a
110.23 wholesale drug distributor may file a complaint with the
110.24 commissioner responsible for regulating the third-party
110.25 purchaser if at any time the third-party purchaser fails to
110.26 comply with paragraph (a).
110.27 (d) If the commissioner responsible for regulating the
110.28 third-party purchaser finds at any time that the third-party
110.29 purchaser has not complied with paragraph (a), the commissioner
110.30 may take enforcement action against a third-party purchaser
110.31 which is subject to the commissioner's regulatory jurisdiction
110.32 and which does not allow a hospital, surgical center, pharmacy,
110.33 or provider to pass-through the tax. The commissioner may by
110.34 order fine or censure the third-party purchaser or revoke or
110.35 suspend the certificate of authority or license of the
110.36 third-party purchaser to do business in this state if the
111.1 commissioner finds that the third-party purchaser has not
111.2 complied with this section. The third-party purchaser may
111.3 appeal the commissioner's order through a contested case hearing
111.4 in accordance with chapter 14.
111.5 [EFFECTIVE DATE.] This section is effective January 1,
111.6 2005, and applies to actions arising from services provided on
111.7 or after that date.
111.8 Sec. 2. Minnesota Statutes 2002, section 297F.01, is
111.9 amended by adding a subdivision to read:
111.10 Subd. 10a. [OUT-OF-STATE RETAILER.] "Out-of-state retailer"
111.11 means a person engaged outside of this state in the business of
111.12 selling, or offering to sell, cigarettes or tobacco products to
111.13 consumers located in this state.
111.14 Sec. 3. [297F.031] [REGISTRATION REQUIREMENT.]
111.15 Prior to making delivery sales or shipping cigarettes or
111.16 tobacco products in connection with any sales, an out-of-state
111.17 retailer shall file with the Department of Revenue a statement
111.18 setting forth the out-of-state retailer's name and trade name,
111.19 and the address of the out-of-state retailer's principal place
111.20 of business and any other place of business.
111.21 Sec. 4. Minnesota Statutes 2002, section 297F.09, is
111.22 amended by adding a subdivision to read:
111.23 Subd. 4a. [REPORTING REQUIREMENTS.] No later than the 18th
111.24 day of each calendar month, an out-of-state retailer that has
111.25 made a delivery of cigarettes or tobacco products or shipped or
111.26 delivered cigarettes or tobacco products into the state in a
111.27 delivery sale in the previous calendar month shall file with the
111.28 Department of Revenue reports in the form and in the manner
111.29 prescribed by the commissioner of revenue that provides for each
111.30 delivery sale, the name and address of the purchaser and the
111.31 brand or brands and quantity of cigarettes or tobacco products
111.32 sold. A tobacco retailer that meets the requirements of United
111.33 States Code, title 15, section 375 et seq. satisfies the
111.34 requirements of this subdivision.
111.35 Sec. 5. [297F.25] [CIGARETTE WHOLESALE TAX.]
111.36 Subdivision 1. [IMPOSITION.] A tax is imposed on the sale
112.1 of cigarettes by a cigarette distributor to a retailer or
112.2 cigarette subjobber for resale in this state. The tax is equal
112.3 to 6.5 percent of:
112.4 (1) 112 percent of the distributor's gross invoice price,
112.5 before any discounts and including the full face value of any
112.6 cigarette stamps and the fee imposed under section 297F.24, of
112.7 the cigarettes sold to a retailer; or
112.8 (2) 112 percent of the cost of the retailer, as defined in
112.9 section 325D.32, subdivision 11, and any fees imposed under
112.10 section 297F.24 of the cigarettes sold to a cigarette subjobber.
112.11 Subd. 2. [TAX COLLECTION REQUIRED.] A cigarette
112.12 distributor must collect the tax imposed under subdivision 1
112.13 from the retailer or cigarette subjobber and the tax must be
112.14 stated and charged separately. The tax collected must be
112.15 remitted to the commissioner in the manner prescribed by
112.16 subdivision 4.
112.17 Subd. 3. [PAYMENT.] Each taxpayer must remit payments of
112.18 the taxes to the commissioner on the same dates prescribed under
112.19 section 297F.09, subdivision 1, for cigarette tax returns,
112.20 including the accelerated remittance of the June liability.
112.21 Subd. 4. [RETURN.] A taxpayer must file a return with the
112.22 commissioner on the same dates prescribed under section 297F.09,
112.23 subdivision 1, for cigarette tax returns.
112.24 Subd. 5. [FORM OF RETURN.] The return must contain the
112.25 information and be in the form prescribed by the commissioner.
112.26 Subd. 6. [TAX AS DEBT.] The tax that is required to be
112.27 collected by the distributor is a debt from the retailer or
112.28 cigarette subjobber to the distributor recoverable at law in the
112.29 same manner as other debts.
112.30 Subd. 7. [ADMINISTRATION.] The audit, assessment,
112.31 interest, appeal, refund, and collection provisions applicable
112.32 to the taxes imposed under this chapter apply to taxes imposed
112.33 under this section.
112.34 Subd. 8. [DEPOSIT OF REVENUES.] Notwithstanding the
112.35 provisions of section 297F.10, the commissioner shall deposit
112.36 all revenues, including penalties and interest, derived from the
113.1 tax imposed by this section, in the general fund.
113.2 [EFFECTIVE DATE.] This section is effective for all sales
113.3 made on or after August 1, 2004.
113.4 Sec. 6. Minnesota Statutes 2002, section 297I.01, is
113.5 amended by adding a subdivision to read:
113.6 Subd. 6a. [DIRECT BUSINESS.] (a) "Direct business" means
113.7 all insurance provided by an insurance company or its agents,
113.8 and specifically includes stop-loss insurance purchased in
113.9 connection with a self-insurance plan for employee health
113.10 benefits or for other purposes, but excludes:
113.11 (1) reinsurance; and
113.12 (2) self-insurance.
113.13 (b) For purposes of this subdivision, an insurance company
113.14 includes a nonprofit health service corporation, health
113.15 maintenance organization, and community integrated service
113.16 network.
113.17 [EFFECTIVE DATE.] This section is effective for insurance
113.18 premiums received after June 30, 2004.
113.19 Sec. 7. Minnesota Statutes 2002, section 297I.05,
113.20 subdivision 4, is amended to read:
113.21 Subd. 4. [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH
113.22 TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A
113.23 tax is imposed on mutual property and casualty companies that
113.24 had total assets greater than $5,000,000 at the end of the
113.25 calendar year but that had total assets less than $1,600,000,000
113.26 on December 31, 1989. The rate of tax is equal to:
113.27 (1) two percent of gross premiums less return premiums on
113.28 all direct business received by the insurer or agents of the
113.29 insurer in Minnesota the tax under subdivision 14 for life
113.30 insurance, in cash or otherwise, during the year; and
113.31 (2) 1.26 percent of gross premiums less return premiums on
113.32 all other direct business received by the insurer or agents of
113.33 the insurer in Minnesota, in cash or otherwise, during the year.
113.34 [EFFECTIVE DATE.] This section is effective for premiums
113.35 received after June 30, 2004.
113.36 Sec. 8. Minnesota Statutes 2002, section 297I.05, is
114.1 amended by adding a subdivision to read:
114.2 Subd. 14. [LIFE INSURANCE.] A tax is imposed on life
114.3 insurance. The rate of tax equals a percentage of gross
114.4 premiums less return premiums on all direct business received by
114.5 the insurer or agents of the insurer in Minnesota for life
114.6 insurance, in cash or otherwise, during the year. For premiums
114.7 received after December 31, 2004, but before January 1, 2006,
114.8 the rate of tax is 1.9 percent. For premiums received after
114.9 December 31, 2005, but before January 1, 2007, the rate of tax
114.10 is 1.8 percent. For premiums received after December 31, 2006,
114.11 but before January 1, 2008, the rate of tax is 1.7 percent. For
114.12 premiums received after December 31, 2007, but before January 1,
114.13 2009, the rate of tax is 1.6 percent. For premiums received
114.14 after December 31, 2008, the rate of tax is 1.5 percent.
114.15 [EFFECTIVE DATE.] This section is effective for premiums
114.16 received after December 31, 2004.
114.17 Sec. 9. Minnesota Statutes 2003 Supplement, section
114.18 298.75, subdivision 1, is amended to read:
114.19 Subdivision 1. [DEFINITIONS.] Except as may otherwise be
114.20 provided, the following words, when used in this section, shall
114.21 have the meanings herein ascribed to them.
114.22 (1) "Aggregate material" shall mean nonmetallic natural
114.23 mineral aggregate including, but not limited to sand, silica
114.24 sand, gravel, crushed rock, limestone, granite, and borrow, but
114.25 only if the borrow is transported on a public road, street, or
114.26 highway. Aggregate material shall not include dimension stone
114.27 and dimension granite. Aggregate material must be measured or
114.28 weighed after it has been extracted from the pit, quarry, or
114.29 deposit.
114.30 (2) "Person" shall mean any individual, firm, partnership,
114.31 corporation, organization, trustee, association, or other entity.
114.32 (3) "Operator" shall mean any person engaged in the
114.33 business of removing aggregate material from the surface or
114.34 subsurface of the soil, for the purpose of sale, either directly
114.35 or indirectly, through the use of the aggregate material in a
114.36 marketable product or service; except that operator does not
115.1 include persons engaged in a transaction in which the aggregate
115.2 is moved within a project's construction limits, as defined in
115.3 the official project construction plan documents, to other
115.4 locations within that same project's construction limits.
115.5 (4) "Extraction site" shall mean a pit, quarry, or deposit
115.6 containing aggregate material and any contiguous property to the
115.7 pit, quarry, or deposit which is used by the operator for
115.8 stockpiling the aggregate material.
115.9 (5) "Importer" shall mean any person who buys aggregate
115.10 material produced from a county not listed in paragraph (6) or
115.11 another state and causes the aggregate material to be imported
115.12 into a county in this state which imposes a tax on aggregate
115.13 material.
115.14 (6) "County" shall mean the counties of Pope, Stearns,
115.15 Benton, Sherburne, Carver, Scott, Dakota, Le Sueur, Kittson,
115.16 Marshall, Pennington, Red Lake, Polk, Norman, Mahnomen, Clay,
115.17 Becker, Carlton, St. Louis, Rock, Murray, Wilkin, Big Stone,
115.18 Sibley, Hennepin, Washington, Chisago, and Ramsey. County also
115.19 means any other county whose board has voted after a public
115.20 hearing to impose the tax under this section and has notified
115.21 the commissioner of revenue of the imposition of the tax.
115.22 (7) "Borrow" shall mean granular borrow, consisting of
115.23 durable particles of gravel and sand, crushed quarry or mine
115.24 rock, crushed gravel or stone, or any combination thereof, the
115.25 ratio of the portion passing the (#200) sieve divided by the
115.26 portion passing the (1 inch) sieve may not exceed 20 percent by
115.27 mass.
115.28 [EFFECTIVE DATE.] This section is effective for aggregate
115.29 sold, imported, transported, or used from a stockpile after June
115.30 30, 2004.
115.31 Sec. 10. [325F.781] [REQUIREMENTS; TOBACCO PRODUCT
115.32 DELIVERY SALES.]
115.33 Subdivision 1. [DEFINITIONS.] (a) For purposes of this
115.34 section, the following terms have the meanings given, unless the
115.35 language or context clearly provides otherwise.
115.36 (b) "Consumer" means an individual who purchases, receives,
116.1 or possesses tobacco products for personal consumption and not
116.2 for resale.
116.3 (c)(1) "Delivery sale" means:
116.4 (i) a sale of tobacco products to a consumer in this state
116.5 when:
116.6 (A) the purchaser submits the order for the sale by means
116.7 of a telephonic or other method of voice transmission, the mail
116.8 or any other delivery service, or the Internet or other on-line
116.9 service; or
116.10 (B) the tobacco products are delivered by use of the mail
116.11 or other delivery service; or
116.12 (ii) a sale of tobacco products that satisfies the criteria
116.13 in clause (1), item (i), regardless of whether the seller is
116.14 located inside or outside the state.
116.15 (2) A sale of tobacco products to an individual in this
116.16 state must be treated as a sale to a consumer, unless the
116.17 individual is licensed as a distributor or retailer of tobacco
116.18 products.
116.19 (d) "Delivery service" means a person, including the United
116.20 States Postal Service, that is engaged in the commercial
116.21 delivery of letters, packages, or other containers.
116.22 (e) "Distributor" means a person, whether located inside or
116.23 outside this state, other than a retailer, who sells or
116.24 distributes tobacco products in the state. Distributor does not
116.25 include a tobacco products manufacturer, export warehouse
116.26 proprietor, or importer with a valid permit under United States
116.27 Code, title 26, section 5712 (1997), if the person sells or
116.28 distributes tobacco products in this state only to distributors
116.29 who hold valid and current licenses under the laws of a state,
116.30 or to an export warehouse proprietor or another manufacturer.
116.31 Distributor does not include a common or contract carrier that
116.32 is transporting tobacco products under a proper bill of lading
116.33 or freight bill that states the quantity, source, and
116.34 destination of tobacco products, or a person who ships tobacco
116.35 products through this state by common or contract carrier under
116.36 a bill of lading or freight bill.
117.1 (f) "Retailer" means a person, whether located inside or
117.2 outside this state, who sells or distributes tobacco products to
117.3 a consumer in this state.
117.4 (g) "Tobacco products" means:
117.5 (1) cigarettes, as defined in section 297F.01, subdivision
117.6 3; and
117.7 (2) smokeless tobacco as defined in section 325F.76.
117.8 Subd. 2. [REQUIREMENTS FOR ACCEPTING ORDER FOR DELIVERY
117.9 SALE.] (a) This subdivision applies to acceptance of an order
117.10 for a delivery sale of tobacco products.
117.11 (b) When accepting the first order for a delivery sale from
117.12 a consumer, the tobacco retailer shall obtain the following
117.13 information from the person placing the order:
117.14 (1) a copy of a valid government-issued document that
117.15 provides the person's name, current address, photograph, and
117.16 date of birth; and
117.17 (2) an original written statement signed by the person
117.18 documenting that the person:
117.19 (i) is of legal age to purchase tobacco products in the
117.20 state;
117.21 (ii) has made a choice whether to receive mailings from a
117.22 tobacco retailer;
117.23 (iii) understands that providing false information may be a
117.24 violation of law; and
117.25 (iv) understands that it is a violation of law to purchase
117.26 tobacco products for subsequent resale or for delivery to
117.27 persons who are under the legal age to purchase tobacco products.
117.28 (c) If an order is made as a result of advertisement over
117.29 the Internet, the tobacco retailer shall request the e-mail
117.30 address of the purchaser and shall receive payment by credit
117.31 card or check prior to shipping.
117.32 (d) Prior to shipping the tobacco products, the tobacco
117.33 retailer shall verify the information provided under paragraph
117.34 (b) against a commercially available database. Any such
117.35 database or databases may also include age and identity
117.36 information from other government or validated commercial
118.1 sources, if that additional information is regularly used by
118.2 government and businesses for the purpose of identity
118.3 verification and authentication, and if the additional
118.4 information is used only to supplement and not to replace the
118.5 government-issued identification data in the age and identity
118.6 verification process.
118.7 Subd. 3. [REQUIREMENTS FOR SHIPPING A DELIVERY SALE.] (a)
118.8 This subdivision applies to a tobacco retailer shipping tobacco
118.9 products pursuant to a delivery sale.
118.10 (b) The tobacco retailer shall clearly mark the outside of
118.11 the package of tobacco products to be shipped "tobacco products -
118.12 adult signature required" and to show the name of the tobacco
118.13 retailer.
118.14 (c) The tobacco retailer shall utilize a delivery service
118.15 that imposes the following requirements:
118.16 (1) an adult must sign for the delivery; and
118.17 (2) the person signing for the delivery must show valid
118.18 government-issued identification that contains a photograph of
118.19 the person signing for the delivery and indicates that the
118.20 person signing for the delivery is of legal age to purchase
118.21 tobacco products and resides at the delivery address.
118.22 (d) The retailer must provide delivery instructions that
118.23 clearly indicate the requirements of this subdivision and must
118.24 declare that state law requires compliance with the requirements.
118.25 Subd. 4. [COMMON CARRIERS.] This section may not be
118.26 construed as imposing liability upon any common carrier, or
118.27 officers or employees of the common carrier, when acting within
118.28 the scope of business of the common carrier.
118.29 Subd. 5. [REGISTRATION REQUIREMENT.] Prior to making
118.30 delivery sales or shipping tobacco products in connection with
118.31 any sales, an out-of-state retailer must meet the requirements
118.32 of section 297F.031.
118.33 Subd. 6. [COLLECTION OF TAXES.] (a) Prior to shipping any
118.34 tobacco products to a purchaser in this state, the out-of-state
118.35 retailer shall comply with all requirements of chapter 297F and
118.36 shall ensure that all state excise taxes and fees that apply to
119.1 such tobacco products have been collected and paid to the state
119.2 and that all related state excise tax stamps or other indicators
119.3 of state excise tax payment have been properly affixed to those
119.4 tobacco products.
119.5 (b) In addition to any penalties under chapter 297F, a
119.6 distributor who fails to pay any tax due according to paragraph
119.7 (a) shall pay, in addition to any other penalty, a penalty of 50
119.8 percent of the tax due but unpaid.
119.9 Subd. 7. [APPLICATION OF STATE LAWS.] All state laws that
119.10 apply to in-state tobacco product retailers shall apply to
119.11 Internet and mail-order sellers that sell into this state.
119.12 Subd. 8. [FORFEITURE.] Any tobacco product sold or
119.13 attempted to be sold in a delivery sale that does not meet the
119.14 requirements of this section is deemed to be contraband and is
119.15 subject to forfeiture in the same manner as and in accordance
119.16 with the provisions of section 297F.21.
119.17 Subd. 9. [CIVIL PENALTIES.] (a) A tobacco retailer or
119.18 distributor who violates this section or rules adopted under
119.19 this section is subject to the following fines:
119.20 (1) for the first violation, a fine of not more than
119.21 $1,000; and
119.22 (2) for the second and any subsequent violation, a fine of
119.23 not more than $5,000.
119.24 (b) A person who submits ordering information under
119.25 subdivision 2, paragraph (b), in another person's name is
119.26 subject to a fine of not more than $1,000.
119.27 Subd. 10. [ENFORCEMENT.] The attorney general may bring an
119.28 action to enforce this section and may seek injunctive relief,
119.29 including a preliminary or final injunction, and fines,
119.30 penalties, and equitable relief and may seek to prevent or
119.31 restrain actions in violation of this section by any person or
119.32 any person controlling such person. In addition, a violation of
119.33 this section is a violation of the Unlawful Trade Practices Act,
119.34 sections 325D.09 to 325D.16.
119.35 Sec. 11. [FLOOR STOCKS TAX.]
119.36 Subdivision 1. [CIGARETTES.] A floor stocks tax is imposed
120.1 on every retailer or cigarette subjobber, on the stamped
120.2 cigarettes in the retailer's or cigarette subjobber's possession
120.3 or under the retailer's or cigarette subjobber's control, at
120.4 12:01 a.m. on July 31, 2004. The tax is imposed at the
120.5 following rates:
120.6 (1) on cigarettes weighing not more than three pounds per
120.7 thousand, 13.5 mills on each cigarette; and
120.8 (2) on cigarettes weighing more than three pounds per
120.9 thousand, 27 mills on each cigarette.
120.10 Each retailer shall file a return with the commissioner, in the
120.11 form the commissioner prescribes, showing the cigarettes on hand
120.12 at 12:01 a.m. on August 1, 2004, and pay the tax due thereon by
120.13 September 1, 2004. Tax not paid by the due date bears interest
120.14 at the rate of one percent a month.
120.15 Subd. 2. [AUDIT AND ENFORCEMENT.] The tax imposed by this
120.16 section is subject to the audit, assessment, and collection
120.17 provisions applicable to the taxes imposed under Minnesota
120.18 Statutes, chapter 297F. The commissioner may require a
120.19 distributor to receive and maintain copies of floor stocks tax
120.20 returns filed by all retailers requesting a credit for returned
120.21 cigarettes.
120.22 Subd. 3. [DEPOSIT OF PROCEEDS.] Notwithstanding the
120.23 provisions of Minnesota Statutes, section 297F.10, the revenue
120.24 from the tax imposed under this section shall be deposited by
120.25 the commissioner in the general fund.
120.26 [EFFECTIVE DATE.] This section is effective the day
120.27 following final enactment.
120.28 ARTICLE 6
120.29 TAX INCREMENT FINANCING
120.30 Section 1. Minnesota Statutes 2003 Supplement, section
120.31 116J.556, is amended to read:
120.32 116J.556 [LOCAL MATCH REQUIREMENT.]
120.33 (a) In order to qualify for a grant under sections 116J.551
120.34 to 116J.557, the municipality must pay for at least one-quarter
120.35 of the project costs as a local match. The municipality shall
120.36 pay an amount of the project costs equal to at least 12 percent
121.1 of the cleanup costs from the municipality's general fund, a
121.2 property tax levy for that purpose, or other unrestricted money
121.3 available to the municipality (excluding tax increments). These
121.4 unrestricted moneys may be spent for project costs, other than
121.5 cleanup costs, and qualify for the local match payment equal to
121.6 12 percent of cleanup costs. The rest of the local match may be
121.7 paid with tax increments, regional, state, or federal money
121.8 available for the redevelopment of brownfields or any other
121.9 money available to the municipality.
121.10 (b) If the development authority establishes a tax
121.11 increment financing district or hazardous substance subdistrict
121.12 on the site to pay for part of the local match requirement, the
121.13 district or subdistrict must be decertified when an amount of
121.14 tax increments equal to no more than three times the costs of
121.15 implementing the response action plan for the site and the
121.16 administrative costs for the district or subdistrict have been
121.17 received, after deducting the amount of the state grant.
121.18 [EFFECTIVE DATE.] This section is effective the day
121.19 following final enactment.
121.20 Sec. 2. Minnesota Statutes 2002, section 469.174,
121.21 subdivision 11, is amended to read:
121.22 Subd. 11. [HOUSING DISTRICT.] "Housing district" means a
121.23 type of tax increment financing district which consists of a
121.24 project, or a portion of a project, intended for occupancy, in
121.25 part, by persons or families of low and moderate income, as
121.26 defined in chapter 462A, Title II of the National Housing Act of
121.27 1934, the National Housing Act of 1959, the United States
121.28 Housing Act of 1937, as amended, Title V of the Housing Act of
121.29 1949, as amended, any other similar present or future federal,
121.30 state, or municipal legislation, or the regulations promulgated
121.31 under any of those acts. A district does not qualify as a
121.32 housing district under this subdivision if the fair market value
121.33 of the improvements which are constructed in the district for
121.34 commercial uses or for uses other than low and moderate income
121.35 housing consists of more than 20 percent of the total fair
121.36 market value of the planned improvements in the development plan
122.1 or agreement. The fair market value of the improvements may be
122.2 determined using the cost of construction, capitalized income,
122.3 or other appropriate method of estimating market value, and that
122.4 satisfies the requirements of section 469.1761. Housing project
122.5 means a project, or a portion of a project, that meets all of
122.6 the qualifications of a housing district under this subdivision,
122.7 whether or not actually established as a housing district.
122.8 [EFFECTIVE DATE.] This section is effective for districts
122.9 for which the request for certification was filed with the
122.10 county auditor after October 5, 1989, except (1) the new
122.11 language is effective for requests for certification made after
122.12 June 30, 2004, and (2) the fair market value of the improvements
122.13 which are constructed for commercial uses in a district for
122.14 which the request for certification was filed with the county
122.15 auditor after October 5, 1989, and before July 1, 2004, may not
122.16 exceed more than 20 percent of total fair market value of the
122.17 planned improvements in the development plan or agreement.
122.18 Sec. 3. Minnesota Statutes 2003 Supplement, section
122.19 469.174, subdivision 25, is amended to read:
122.20 Subd. 25. [INCREMENT.] "Increment," "tax increment," "tax
122.21 increment revenues," "revenues derived from tax increment," and
122.22 other similar terms for a district include:
122.23 (1) taxes paid by the captured net tax capacity, but
122.24 excluding any excess taxes, as computed under section 469.177;
122.25 (2) the proceeds from the sale or lease of property,
122.26 tangible or intangible, to the extent the property was purchased
122.27 by the authority with tax increments;
122.28 (3) principal and interest received on loans or other
122.29 advances made by the authority with tax increments; and
122.30 (4) interest or other investment earnings on or from tax
122.31 increments;
122.32 (5) repayment or return of tax increments made to the
122.33 authority under agreements for districts for which the request
122.34 for certification was made after August 1, 1993; and
122.35 (6) the market value homestead credit paid to the authority
122.36 under section 273.1384.
123.1 [EFFECTIVE DATE.] This section is effective for tax
123.2 increment financing districts, regardless of when the request
123.3 for certification was made, including districts for which the
123.4 request for certification was made before August 1, 1979,
123.5 provided that the amendment to clause (2) applies only to the
123.6 extent that the underlying provisions of clause (2) apply to the
123.7 district and to the sale or lease under prior law.
123.8 Sec. 4. Minnesota Statutes 2002, section 469.175,
123.9 subdivision 4a, is amended to read:
123.10 Subd. 4a. [FILING PLAN WITH STATE.] (a) The authority must
123.11 file a copy of the tax increment financing plan and amendments
123.12 to the plan with the commissioner of revenue and the state
123.13 auditor. The authority must also file a copy of the development
123.14 plan or the project plan for the project area with the
123.15 commissioner of revenue. The commissioner of revenue shall
123.16 provide a copy of a plan to the state auditor upon request and
123.17 the state auditor.
123.18 (b) Filing under this subdivision must be made within 60
123.19 days after the latest of:
123.20 (1) the filing of the request for certification of the
123.21 district;
123.22 (2) approval of the plan by the municipality; or
123.23 (3) adoption of the plan by the authority.
123.24 [EFFECTIVE DATE.] This section is effective for plans filed
123.25 after July 1, 2004.
123.26 Sec. 5. Minnesota Statutes 2002, section 469.176,
123.27 subdivision 4d, is amended to read:
123.28 Subd. 4d. [HOUSING DISTRICTS.] Revenue derived from tax
123.29 increment from a housing district must be used solely to finance
123.30 the cost of housing projects as defined in section sections
123.31 469.174, subdivision 11, and 469.1761. The cost of public
123.32 improvements directly related to the housing projects and the
123.33 allocated administrative expenses of the authority may be
123.34 included in the cost of a housing project.
123.35 [EFFECTIVE DATE.] This section is effective for all
123.36 districts to which the provisions of Minnesota Statutes, section
124.1 469.1761, applies.
124.2 Sec. 6. Minnesota Statutes 2002, section 469.1761,
124.3 subdivision 1, is amended to read:
124.4 Subdivision 1. [REQUIREMENT IMPOSED.] (a) In order for a
124.5 tax increment financing district to qualify as a housing
124.6 district,:
124.7 (1) the income limitations provided in this section must be
124.8 satisfied; and
124.9 (2) no more than 20 percent of the square footage of
124.10 buildings that receive assistance from tax increments may
124.11 consist of commercial, retail, or other nonresidential uses.
124.12 (b) The requirements imposed by this section apply to
124.13 residential property receiving assistance financed with tax
124.14 increments, including interest reduction, land transfers at less
124.15 than the authority's cost of acquisition, utility service or
124.16 connections, roads, parking facilities, or other subsidies. The
124.17 provisions of this section do not apply to districts located in
124.18 a targeted area as defined in section 462C.02, subdivision 9,
124.19 clause (e).
124.20 [EFFECTIVE DATE.] This section is effective for districts
124.21 for which the request for certification was made after June 30,
124.22 2004.
124.23 Sec. 7. Minnesota Statutes 2002, section 469.1761,
124.24 subdivision 3, is amended to read:
124.25 Subd. 3. [RENTAL PROPERTY.] For residential rental
124.26 property, the property must satisfy the income requirements for
124.27 a qualified residential rental project as defined in section
124.28 142(d) of the Internal Revenue Code. A property also satisfies
124.29 the requirements of section 142(d) if 50 percent of the
124.30 residential units in the project are occupied by individuals
124.31 whose income is 80 percent or less of area median gross income.
124.32 The requirements of this subdivision apply for the duration of
124.33 the tax increment financing district.
124.34 [EFFECTIVE DATE.] This section is effective for districts
124.35 for which the request for certification was made after June 30,
124.36 2004.
125.1 Sec. 8. Minnesota Statutes 2003 Supplement, section
125.2 469.177, subdivision 1, is amended to read:
125.3 Subdivision 1. [ORIGINAL NET TAX CAPACITY.] (a) Upon or
125.4 after adoption of a tax increment financing plan, the auditor of
125.5 any county in which the district is situated shall, upon request
125.6 of the authority, certify the original net tax capacity of the
125.7 tax increment financing district and that portion of the
125.8 district overlying any subdistrict as described in the tax
125.9 increment financing plan and shall certify in each year
125.10 thereafter the amount by which the original net tax capacity has
125.11 increased or decreased as a result of a change in tax exempt
125.12 status of property within the district and any subdistrict,
125.13 reduction or enlargement of the district or changes pursuant to
125.14 subdivision 4.
125.15 (b) If the classification under section 273.13 of property
125.16 located in a district changes to a classification that has a
125.17 different assessment ratio, the original net tax capacity of
125.18 that property must be redetermined at the time when its use is
125.19 changed as if the property had originally been classified in the
125.20 same class in which it is classified after its use is changed.
125.21 (c) The amount to be added to the original net tax capacity
125.22 of the district as a result of previously tax exempt real
125.23 property within the district becoming taxable equals the net tax
125.24 capacity of the real property as most recently assessed pursuant
125.25 to section 273.18 or, if that assessment was made more than one
125.26 year prior to the date of title transfer rendering the property
125.27 taxable, the net tax capacity assessed by the assessor at the
125.28 time of the transfer. If improvements are made to tax exempt
125.29 property after certification of the district and before the
125.30 parcel becomes taxable, the assessor shall, at the request of
125.31 the authority, separately assess the estimated market value of
125.32 the improvements. If the property becomes taxable, the county
125.33 auditor shall add to original net tax capacity, the net tax
125.34 capacity of the parcel, excluding the separately assessed
125.35 improvements. If substantial taxable improvements were made to
125.36 a parcel after certification of the district and if the property
126.1 later becomes tax exempt, in whole or part, as a result of the
126.2 authority acquiring the property through foreclosure or exercise
126.3 of remedies under a lease or other revenue agreement or as a
126.4 result of tax forfeiture, the amount to be added to the original
126.5 net tax capacity of the district as a result of the property
126.6 again becoming taxable is the amount of the parcel's value that
126.7 was included in original net tax capacity when the parcel was
126.8 first certified. The amount to be added to the original net tax
126.9 capacity of the district as a result of enlargements equals the
126.10 net tax capacity of the added real property as most recently
126.11 certified by the commissioner of revenue as of the date of
126.12 modification of the tax increment financing plan pursuant to
126.13 section 469.175, subdivision 4.
126.14 (d) If the net tax capacity of a property increases because
126.15 the property no longer qualifies under the Minnesota
126.16 Agricultural Property Tax Law, section 273.111; the Minnesota
126.17 Open Space Property Tax Law, section 273.112; or the
126.18 Metropolitan Agricultural Preserves Act, chapter 473H, or
126.19 because platted, unimproved property is improved or three years
126.20 pass market value is increased after approval of the plat under
126.21 section 273.11, subdivision 1 subdivision 14, 14a, or 14b, the
126.22 increase in net tax capacity must be added to the original net
126.23 tax capacity.
126.24 (e) The amount to be subtracted from the original net tax
126.25 capacity of the district as a result of previously taxable real
126.26 property within the district becoming tax exempt, or a reduction
126.27 in the geographic area of the district, shall be the amount of
126.28 original net tax capacity initially attributed to the property
126.29 becoming tax exempt or being removed from the district. If the
126.30 net tax capacity of property located within the tax increment
126.31 financing district is reduced by reason of a court-ordered
126.32 abatement, stipulation agreement, voluntary abatement made by
126.33 the assessor or auditor or by order of the commissioner of
126.34 revenue, the reduction shall be applied to the original net tax
126.35 capacity of the district when the property upon which the
126.36 abatement is made has not been improved since the date of
127.1 certification of the district and to the captured net tax
127.2 capacity of the district in each year thereafter when the
127.3 abatement relates to improvements made after the date of
127.4 certification. The county auditor may specify reasonable form
127.5 and content of the request for certification of the authority
127.6 and any modification thereof pursuant to section 469.175,
127.7 subdivision 4.
127.8 (f) If a parcel of property contained a substandard
127.9 building that was demolished or removed and if the authority
127.10 elects to treat the parcel as occupied by a substandard building
127.11 under section 469.174, subdivision 10, paragraph (b), the
127.12 auditor shall certify the original net tax capacity of the
127.13 parcel using the greater of (1) the current net tax capacity of
127.14 the parcel, or (2) the estimated market value of the parcel for
127.15 the year in which the building was demolished or removed, but
127.16 applying the class rates for the current year.
127.17 (g) For a redevelopment district qualifying under section
127.18 469.174, subdivision 10, paragraph (a), clause (4), as a
127.19 qualified disaster area, the auditor shall certify the value of
127.20 the land as the original tax capacity for any parcel in the
127.21 district that contains a building that suffered substantial
127.22 damage as a result of the disaster or emergency.
127.23 [EFFECTIVE DATE.] This section is effective for land
127.24 platted on or after August 1, 1991.
127.25 Sec. 9. Minnesota Statutes 2002, section 469.1771,
127.26 subdivision 5, is amended to read:
127.27 Subd. 5. [DISPOSITION OF PAYMENTS.] If the authority does
127.28 not have sufficient increments or other available money to make
127.29 a payment required by this section, the municipality that
127.30 approved the district must use any available money to make the
127.31 payment including the levying of property taxes. Money received
127.32 by the county auditor under this section must be distributed as
127.33 excess increments under section 469.176, subdivision 2,
127.34 paragraph (a) (c), clause (4), except that if the county auditor
127.35 receives the payment after (1) 60 days from a municipality's
127.36 receipt of the state auditor's notification under subdivision 1,
128.1 paragraph (c), of noncompliance requiring the payment, or (2)
128.2 the commencement of an action by the county attorney to compel
128.3 the payment, then no distributions may be made to the
128.4 municipality that approved the tax increment financing district.
128.5 [EFFECTIVE DATE.] This section is effective at the same
128.6 time as the amendments to Minnesota Statutes, section 469.176,
128.7 subdivision 2, by Laws 2003, chapter 127, article 10, section 11.
128.8 Sec. 10. Minnesota Statutes 2002, section 469.178,
128.9 subdivision 1, is amended to read:
128.10 Subdivision 1. [GENERALLY.] Notwithstanding any other law,
128.11 no bonds, payment for which tax increment is pledged, shall be
128.12 issued in connection with any project for which tax increment
128.13 financing has been undertaken except as authorized in this
128.14 section. The proceeds from the bonds shall be used only in
128.15 accordance with section 469.176, subdivision subdivisions 4 to
128.16 4l, as if the proceeds were tax increment, except that a tax
128.17 increment financing plan need not be adopted for any project for
128.18 which tax increment financing has been undertaken prior to
128.19 August 1, 1979, pursuant to laws not requiring a tax increment
128.20 financing plan. The bonds are not included for purposes of
128.21 computing the net debt of any municipality.
128.22 [EFFECTIVE DATE.] This section is effective for tax
128.23 increment financing districts for which the request for
128.24 certification was made after August 1, 1979.
128.25 Sec. 11. Laws 1998, chapter 389, article 11, section 24,
128.26 subdivision 1, is amended to read:
128.27 Subdivision 1. [SPECIAL RULES.] (a) If the city elects
128.28 upon the adoption of the tax increment financing plan for the
128.29 district, the rules under this section apply to redevelopment or
128.30 soils condition tax increment financing districts established by
128.31 the city of New Brighton or a development authority of the city
128.32 in the area bounded on the north by the south boundary line of
128.33 tax increment district number 8 extended to Long Lake regional
128.34 park, on the east by interstate highway 35W, on the south by
128.35 interstate highway 694, and on the west by Long Lake regional
128.36 park.
129.1 (b) The five-year rule under Minnesota Statutes, section
129.2 469.1763, subdivision 3, is extended to nine ten years for the
129.3 district.
129.4 (c) The limitations on spending increment outside of the
129.5 district under Minnesota Statutes, section 469.1763, subdivision
129.6 2, do not apply, but increments may only be expended on
129.7 improvements or activities within the area defined in paragraph
129.8 (a) and increments collected from parcels identified in
129.9 paragraph (d) may only be spent on eligible expenses within the
129.10 area consisting of those parcels, sanitary sewer relocation and
129.11 the cost of road improvements directly resulting from
129.12 development of the parcels, and for administrative expenses.
129.13 (d) The requirements for qualifying a redevelopment
129.14 district under Minnesota Statutes, section 469.174, subdivision
129.15 10, do not apply to the parcels identified as that part of
129.16 20-30-23-13-0005 lying east of Old Highway 8, 20-30-23-14-0001,
129.17 20-30-23-14-0002, 20-30-23-14-0004, 20-30-23-14-0003,
129.18 20-30-23-41-0001, 21-30-23-32-0009, 21-30-23-32-0010,
129.19 20-30-23-41-0015, 20-30-23-41-0003, 21-30-23-32-0013,
129.20 20-30-23-41-0004, 20-30-23-41-0016, 20-30-23-41-0005,
129.21 20-30-23-41-0006, 20-30-23-41-0007, 20-30-23-41-0014,
129.22 20-30-23-41-0010, and 20-30-23-44-0002. The area of each parcel
129.23 is deemed eligible for the purpose of qualifying for inclusion
129.24 in a redevelopment district.
129.25 [EFFECTIVE DATE.] This section is effective upon approval
129.26 by the governing bodies of the city of New Brighton and Ramsey
129.27 County and upon compliance by the city with Minnesota Statutes,
129.28 section 645.021, subdivision 3.
129.29 Sec. 12. Laws 1998, chapter 389, article 11, section 24,
129.30 subdivision 2, is amended to read:
129.31 Subd. 2. [EXPIRATION.] (a) The exception from the
129.32 limitations of Minnesota Statutes, section 469.1763, subdivision
129.33 2, expires 18 years after the receipt of the first increment
129.34 from a district to which the city has elected that this section
129.35 applies.
129.36 (b) The authority to approve tax increment financing plans
130.1 to establish a tax increment financing district or districts
130.2 under this section expires on December 31, 2008.
130.3 (c) If parcels identified in subdivision 1, paragraph (d),
130.4 are released from the development agreement without being
130.5 developed and the right to develop the parcels is returned to
130.6 the city, the authority to approve tax increment financing plans
130.7 and districts under this section for those parcels is extended
130.8 for five additional years from the date the development rights
130.9 are returned to the city.
130.10 [EFFECTIVE DATE.] This section is effective upon approval
130.11 by the governing bodies of the city of New Brighton and Ramsey
130.12 County and upon compliance by the city with Minnesota Statutes,
130.13 section 645.021, subdivision 3.
130.14 Sec. 13. [EXTENSION OF TIME TO EXPEND TAX INCREMENT.]
130.15 Notwithstanding any contrary provision of law or charter,
130.16 for tax increment financing district number 3, established on
130.17 December 19, 1994, by Brooklyn Center Resolution No. 94-273,
130.18 Minnesota Statutes, section 469.1763, subdivision 3, applies to
130.19 the district by permitting a period of 13 years for commencement
130.20 of activities within the district.
130.21 [EFFECTIVE DATE.] This section is effective upon approval
130.22 by the governing body of the city of Brooklyn Center and
130.23 compliance with Minnesota Statutes, section 645.021, subdivision
130.24 3.
130.25 Sec. 14. [CITY OF ROBBINSDALE; TIF.]
130.26 The governing body of the city of Robbinsdale and its
130.27 economic development authority may treat the building located at
130.28 the corner of Regent Avenue and County Road 9 in the city of
130.29 Robbinsdale and originally constructed as the Robbinsdale High
130.30 School along with the subsequent additions to and improvements
130.31 of that building as a structurally substandard building for
130.32 purposes of Minnesota Statutes, section 469.174, subdivision 10,
130.33 without regard to the requirements of paragraph (c) of that
130.34 subdivision.
130.35 [EFFECTIVE DATE.] This section is effective upon approval
130.36 by the governing body of the city of Robbinsdale under Minnesota
131.1 Statutes, section 645.021.
131.2 Sec. 15. [WABASHA TAX INCREMENT FINANCING DISTRICT.]
131.3 Subdivision 1. [DISTRICT EXTENSION.] The governing body of
131.4 the city of Wabasha may elect to extend the duration of its
131.5 redevelopment tax increment financing district number 3 by up to
131.6 three additional years.
131.7 Subd. 2. [FIVE-YEAR RULE.] The requirements of Minnesota
131.8 Statutes, section 469.1763, subdivision 3, that activities must
131.9 be undertaken within a five-year period from the date of
131.10 certification of a tax increment financing district must be
131.11 considered to be met for the city of Wabasha redevelopment tax
131.12 increment district number 3, if the activities are undertaken
131.13 within ten years from the date of certification of the district.
131.14 Subd. 3. [NATIONAL EAGLE CENTER.] Notwithstanding the
131.15 provisions of Minnesota Statutes, section 469.176, subdivision
131.16 4l, or any other law, the city of Wabasha may spend the proceeds
131.17 of tax increment bonds issued prior to January 1, 2000, to pay
131.18 the costs of acquiring and constructing a National Eagle Center
131.19 in the city. The city of Wabasha may also use tax increment
131.20 from its tax increment districts to pay the debt service on such
131.21 bonds, or any bonds issued to refund such bonds, subject to
131.22 legal restrictions on the pooling of tax increment. These bonds
131.23 may not be treated as preexisting obligations for purposes of
131.24 Minnesota Statutes, section 469.1794.
131.25 Subd. 4. [POOLING.] Except as otherwise specifically
131.26 provided in this section, all increments from district number 3
131.27 must be spent on activities within the district and
131.28 administrative expenses.
131.29 [EFFECTIVE DATE.] Subdivision 1 is effective upon
131.30 compliance with the provisions of Minnesota Statutes, sections
131.31 469.1782, subdivision 2, and 645.021. Subdivisions 2 and 3 are
131.32 effective upon compliance by the governing body of the city of
131.33 Wabasha with the provisions of Minnesota Statutes, section
131.34 645.021.
131.35 Sec. 16. [REPEALER.]
131.36 Minnesota Statutes 2002, sections 469.176, subdivision 1a;
132.1 and 469.1766, are repealed.
132.2 [EFFECTIVE DATE.] The repeal of Minnesota Statutes, section
132.3 469.1766, is effective for districts for which the request for
132.4 certification was made after August 1, 1993. The repeal of
132.5 Minnesota Statutes, section 469.176, subdivision 1a, is
132.6 effective the day following final enactment, provided that
132.7 Minnesota Statutes, section 469.176, subdivision 1a, is
132.8 satisfied for any district to which it applies, if bonds have
132.9 been issued, property acquired, or public improvements
132.10 constructed before the end of the three-year period, regardless
132.11 of whether the action was undertaken before or after
132.12 certification of the district.
132.13 ARTICLE 7
132.14 INTERNATIONAL ECONOMIC DEVELOPMENT ZONES
132.15 Section 1. Minnesota Statutes 2002, section 272.02, is
132.16 amended by adding a subdivision to read:
132.17 Subd. 73. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE
132.18 PROPERTY.] (a) Improvements to real property, and personal
132.19 property, classified under section 273.13, subdivision 24, and
132.20 located within an international economic development zone
132.21 designated under section 469.322, are exempt from ad valorem
132.22 taxes levied under chapter 275, if the occupant of the property
132.23 is a qualified business, as defined in section 469.321.
132.24 (b) The exemption applies beginning for the first
132.25 assessment year after designation of the international economic
132.26 development zone. The exemption applies to each assessment year
132.27 that begins during the duration of the international economic
132.28 development zone and to property occupied by July 1 of the
132.29 assessment year by a qualified business for the duration
132.30 permitted under section 469.324, subdivision 2.
132.31 Sec. 2. Minnesota Statutes 2002, section 290.06, is
132.32 amended by adding a subdivision to read:
132.33 Subd. 32. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE JOB
132.34 CREDIT.] A taxpayer that is a qualified business, as defined in
132.35 section 469.321, subdivision 6, is allowed a credit as
132.36 determined under section 469.325 against the tax imposed by this
133.1 chapter.
133.2 [EFFECTIVE DATE.] This section is effective the day
133.3 following final enactment.
133.4 Sec. 3. Minnesota Statutes 2002, section 290.191, is
133.5 amended by adding a subdivision to read:
133.6 Subd. 13. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONES.] (a)
133.7 A qualified business as defined under section 469.321 may
133.8 exclude from:
133.9 (1) the numerator of its payroll factor the amount of its
133.10 international economic development zone payroll; and
133.11 (2) the numerator of its property factor the amount of its
133.12 property with a situs in the international economic development
133.13 zone.
133.14 (b) The provisions of this subdivision apply to a qualified
133.15 business for the duration provided under section 469.324.
133.16 [EFFECTIVE DATE.] This section is effective the day
133.17 following final enactment.
133.18 Sec. 4. Minnesota Statutes 2002, section 297A.68, is
133.19 amended by adding a subdivision to read:
133.20 Subd. 41. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONES.] (a)
133.21 Purchases of tangible personal property or taxable services by a
133.22 qualified business, as defined in section 469.321, are exempt if
133.23 the property or services are primarily used or consumed in an
133.24 international economic development zone designated under section
133.25 469.322.
133.26 (b) Purchase and use of construction materials and supplies
133.27 for construction of improvements to real property in an
133.28 international economic development zone are exempt if the
133.29 improvements after completion of construction are to be used in
133.30 the conduct of a qualified business, as defined in section
133.31 469.321. This exemption applies regardless of whether the
133.32 purchases are made by the business or a contractor.
133.33 (c) The exemptions under this subdivision apply to a local
133.34 sales and use tax, regardless of whether the local tax is
133.35 imposed on sales taxable under this chapter or in another law,
133.36 ordinance, or charter provision.
134.1 (d) This subdivision applies to sales, if the purchase was
134.2 made and delivery received during the period provided under
134.3 section 469.324, subdivision 2.
134.4 [EFFECTIVE DATE.] This section is effective for sales made
134.5 on or after the day following final enactment.
134.6 Sec. 5. [469.321] [DEFINITIONS.]
134.7 Subdivision 1. [SCOPE.] For purposes of sections 469.321
134.8 to 469.327, the following terms have the meanings given.
134.9 Subd. 2. [FOREIGN TRADE ZONE.] "Foreign trade zone" means
134.10 a foreign trade zone designated pursuant to United States Code,
134.11 title 19, section 81b, for the right to use the powers provided
134.12 in United States Code, title 19, sections 81a to 81u, or a
134.13 subzone authorized by the foreign trade zone.
134.14 Subd. 3. [FOREIGN TRADE ZONE AUTHORITY.] "Foreign trade
134.15 zone authority" means the Greater Metropolitan Foreign Trade
134.16 Zone Commission number 119, a joint powers authority created by
134.17 the county of Hennepin, the cities of Minneapolis and
134.18 Bloomington, and the Metropolitan Airports Commission, under the
134.19 authority of section 469.059 or 469.101, which includes any
134.20 other political subdivisions that enter into the authority after
134.21 its creation.
134.22 Subd. 4. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE.] An
134.23 "international economic development zone" or "zone" is a zone so
134.24 designated under section 469.322.
134.25 Subd. 5. [PERSON.] "Person" includes an individual,
134.26 corporation, partnership, limited liability company,
134.27 association, or any other entity.
134.28 Subd. 6. [QUALIFIED BUSINESS.] (a) "Qualified business"
134.29 means a person carrying on a trade or business at a place of
134.30 business located within an international economic development
134.31 zone that is:
134.32 (1) engaged in the furtherance of international export or
134.33 import of goods; and
134.34 (2) certified by the foreign trade zone authority as a
134.35 trade or business that furthers the purpose of developing
134.36 international distribution capacity and capability.
135.1 (b) A person that relocates a trade or business from within
135.2 Minnesota but outside an international economic development zone
135.3 into an international economic development zone is not a
135.4 qualified business, unless the business:
135.5 (1)(i) increases full-time employment in the first full
135.6 year of operation within the international economic development
135.7 zone by at least 20 percent measured relative to the operations
135.8 that were relocated and maintains the required level of
135.9 employment for each year that tax incentives under section
135.10 469.324 are claimed; or
135.11 (ii) makes a capital investment in the property located
135.12 within a zone equal to at least ten percent of the gross
135.13 revenues of the operations that were relocated in the
135.14 immediately proceeding taxable year; and
135.15 (2) enters a binding written agreement with the foreign
135.16 trade zone authority that:
135.17 (i) pledges that the business will meet the requirements of
135.18 clause (1);
135.19 (ii) provides for repayment of all tax benefits enumerated
135.20 under section 469.324 to the business under the procedures in
135.21 section 469.326, if the requirements of clause (1) are not met
135.22 for the taxable year or for taxes payable during a year in which
135.23 the requirements were not met; and
135.24 (iii) contains any other terms the foreign trade zone
135.25 authority determines appropriate.
135.26 Clause (1) of this paragraph does not apply to a freight
135.27 forwarder.
135.28 Subd. 7. [REGIONAL DISTRIBUTION CENTER.] A "regional
135.29 distribution center" is a distribution center developed within a
135.30 foreign trade zone. The regional distribution center must have
135.31 as its primary purpose to facilitate gathering of freight for
135.32 the purpose of centralizing the functions necessary for the
135.33 shipment of freight in international commerce, including, but
135.34 not limited to, security and customs functions.
135.35 Subd. 8. [RELOCATE.] (a) "Relocate" means that a trade or
135.36 business:
136.1 (1) ceases one or more operations or functions at another
136.2 location in Minnesota and begins performing substantially the
136.3 same operations or functions at a location in an international
136.4 economic development zone; or
136.5 (2) reduces employment at another location in Minnesota
136.6 during a period starting one year before and ending one year
136.7 after it begins operations in an international economic
136.8 development zone and its employees in the international economic
136.9 development zone are engaged in the same line of business as the
136.10 employees at the location where it reduced employment.
136.11 (b) "Relocate" does not include an expansion by a business
136.12 that establishes a new facility that does not replace or
136.13 supplant an existing operation or employment, in whole or in
136.14 part.
136.15 (c) "Trade or business" includes any business entity that
136.16 is substantially similar in operation or ownership to the
136.17 business entity seeking to be a qualified business.
136.18 Subd. 9. [INTERNATIONAL ECONOMIC DEVELOPMENT ZONE PAYROLL
136.19 FACTOR.] "International economic development zone payroll
136.20 factor" or "international economic development zone payroll" is
136.21 that portion of the payroll factor under section 290.191 that
136.22 represents:
136.23 (1) wages or salaries paid to an individual for services
136.24 performed in an international economic development zone; or
136.25 (2) wages or salaries paid to individuals working from
136.26 offices within an international economic development zone, if
136.27 their employment requires them to work outside the zone and the
136.28 work is incidental to the work performed by the individual
136.29 within the zone.
136.30 Subd. 10. [FREIGHT FORWARDER.] "Freight forwarder" is a
136.31 business that, for compensation, ensures that goods produced or
136.32 sold by another business move from point of origin to point of
136.33 destination.
136.34 [EFFECTIVE DATE.] This section is effective the day
136.35 following final enactment.
136.36 Sec. 6. [469.322] [DESIGNATION OF INTERNATIONAL ECONOMIC
137.1 DEVELOPMENT ZONE.]
137.2 (a) An area designated as a foreign trade zone may be
137.3 designated by the foreign trade zone authority as an
137.4 international economic development zone if within the zone a
137.5 regional distribution center is being developed pursuant to
137.6 section 469.323. The zone must consist of contiguous area of
137.7 not less than 500 acres and not more than 1,000 acres. The
137.8 designation authority under this section is limited to one zone.
137.9 (b) In making the designation, the foreign trade zone
137.10 authority, in consultation with the Minnesota Department of
137.11 Transportation and the Metropolitan Council, shall consider
137.12 access to major transportation routes, consistency with current
137.13 state transportation and air cargo planning, adequacy of the
137.14 size of the site, access to airport facilities, present and
137.15 future capacity at the designated airport, the capability to
137.16 meet integrated present and future air cargo, security, and
137.17 inspection services, and access to other infrastructure and
137.18 financial incentives. The border of the international economic
137.19 development zone must be no more than 60 miles distant or 90
137.20 minutes drive time from the border of the Minneapolis-St. Paul
137.21 International Airport. The county in which the zone is located
137.22 must be a member of the foreign trade zone authority.
137.23 (c) Prior to a final site designation, a transportation
137.24 impact study based on the regional model and utilizing traffic
137.25 forecasting and assignments must be conducted. The results must
137.26 be used to evaluate the effects of the proposed use on the
137.27 transportation system and identify any needed improvements. If
137.28 the site is in the metropolitan area the study must also
137.29 evaluate the effect of the transportation impacts on the
137.30 Metropolitan Transportation System plan as well as the
137.31 comprehensive plans of the municipalities that would be affected.
137.32 [EFFECTIVE DATE.] This section is effective the day
137.33 following final enactment.
137.34 Sec. 7. [469.323] [FOREIGN TRADE ZONE AUTHORITY POWERS.]
137.35 Subdivision 1. [DEVELOPMENT OF REGIONAL DISTRIBUTION
137.36 CENTER.] The foreign trade zone authority is responsible for
138.1 creating a development plan for the regional distribution
138.2 center. The regional distribution center must be developed with
138.3 the purpose of expanding, on a regional basis, international
138.4 distribution capacity and capability. The foreign trade zone
138.5 authority shall consult with municipalities that have indicated
138.6 to the authority an interest in locating the international
138.7 economic development zone within their boundaries, as well as
138.8 interested businesses, potential financiers, and appropriate
138.9 state and federal agencies.
138.10 Subd. 2. [PORT AUTHORITY POWERS.] The governing body of
138.11 the foreign trade zone authority may establish a port authority
138.12 that has the same powers as a port authority established under
138.13 section 469.049. If the foreign trade zone authority
138.14 establishes a port authority, the governing body of the foreign
138.15 trade zone authority may exercise all powers granted to a city
138.16 by sections 469.048 to 469.068, except it may not impose or
138.17 request imposition of a property tax levy under section 469.053
138.18 by any city.
138.19 [EFFECTIVE DATE.] This section is effective the day
138.20 following final enactment.
138.21 Sec. 8. [469.324] [TAX INCENTIVES IN INTERNATIONAL
138.22 ECONOMIC DEVELOPMENT ZONE.]
138.23 Subdivision 1. [AVAILABILITY.] Qualified businesses that
138.24 operate in an international economic development zone,
138.25 individuals who invest in a regional distribution center or
138.26 qualified businesses that operate in an international economic
138.27 development zone, and property located in an international
138.28 economic development zone qualify for:
138.29 (1) exemption from the state sales and use tax and any
138.30 local sales and use taxes on qualifying purchases as provided in
138.31 section 297A.68, subdivision 41;
138.32 (2) exemption from the property tax as provided in section
138.33 272.02, subdivision 73;
138.34 (3) the jobs credit allowed under section 469.325;
138.35 (4) the corporate franchise tax exemption under section
138.36 290.191, subdivision 13.
139.1 Subd. 2. [DURATION.] (a) Except as provided in paragraph
139.2 (b), the jobs credit described in subdivision 1, clause (3), and
139.3 the corporate franchise exemption under subdivision 1, clause
139.4 (4), is available for no more than eight consecutive taxable
139.5 years for any taxpayer. The sales and use tax exemption
139.6 described in subdivision 1, clause (1), is available for each
139.7 taxpayer that claims it for taxes otherwise payable on
139.8 transactions during a period of eight years from the date when
139.9 the first exemption is claimed by that taxpayer. The property
139.10 tax exemption described under subdivision 1, clause (2), is
139.11 available for any parcel of property for eight consecutive taxes
139.12 payable years. No incentives described in subdivision 1,
139.13 clauses (1) to (4), are available after December 31, 2020.
139.14 (b) For taxpayers that are freight forwarders, the
139.15 durations provided under paragraph (a) are reduced to four years.
139.16 Sec. 9. [469.325] [JOBS CREDIT.]
139.17 Subdivision 1. [CREDIT ALLOWED.] A qualified business is
139.18 allowed a credit against the taxes imposed under chapter 290.
139.19 The credit equals seven percent of the:
139.20 (1) lesser of:
139.21 (i) zone payroll for the taxable year, less the zone
139.22 payroll for the base year; or
139.23 (ii) total Minnesota payroll for the taxable year, less
139.24 total Minnesota payroll for the base year; minus
139.25 (2) $30,000 multiplied by the number of full-time
139.26 equivalent employees that the qualified business employs in the
139.27 international economic development zone for the taxable year,
139.28 minus the number of full-time equivalent employees the business
139.29 employed in the zone in the base year, but not less than zero.
139.30 Subd. 2. [DEFINITIONS.] (a) For purposes of this section,
139.31 the following terms have the meanings given.
139.32 (b) "Base year" means the taxable year beginning during the
139.33 calendar year prior to the calendar year in which the zone
139.34 designation took effect.
139.35 (c) "Full-time equivalent employees" means the equivalent
139.36 of annualized expected hours of work equal to 2,080 hours.
140.1 (d) "Minnesota payroll" means the wages or salaries
140.2 attributed to Minnesota under section 290.191, subdivision 12,
140.3 for the qualified business or the unitary business of which the
140.4 qualified business is a part, whichever is greater.
140.5 (e) "Zone payroll" means wages or salaries used to
140.6 determine the zone payroll factor for the qualified business,
140.7 less the amount of compensation attributable to any employee
140.8 that exceeds $100,000.
140.9 Subd. 3. [INFLATION ADJUSTMENT.] For taxable years
140.10 beginning after December 31, 2005, the dollar amounts in
140.11 subdivision 1, clause (2), and subdivision 2, paragraph (e), are
140.12 annually adjusted for inflation. The commissioner of revenue
140.13 shall adjust the amounts by the percentage determined under
140.14 section 290.06, subdivision 2d, for the taxable year.
140.15 Subd. 4. [REFUNDABLE.] If the amount of the credit exceeds
140.16 the liability for tax under chapter 290, the commissioner of
140.17 revenue shall refund the excess to the qualified business.
140.18 Subd. 5. [APPROPRIATION.] An amount sufficient to pay the
140.19 refunds authorized by this section is appropriated to the
140.20 commissioner of revenue from the general fund.
140.21 [EFFECTIVE DATE.] This section is effective for taxable
140.22 years beginning after December 31, 2004.
140.23 Sec. 10. [469.326] [REPAYMENT OF TAX BENEFITS.]
140.24 Subdivision 1. [REPAYMENT OBLIGATION.] A person must repay
140.25 the amount of the tax reduction received under section 469.324,
140.26 subdivision 1, clauses (1) and (2), or a refund received under
140.27 section 469.325, during the two years immediately before it
140.28 ceased to operate in the zone, if the person ceased to operate
140.29 its facility located within the zone or otherwise ceases to be
140.30 or is not a qualified business.
140.31 Subd. 2. [DISPOSITION OF REPAYMENT.] The repayment must be
140.32 paid to the state to the extent it represents a state tax
140.33 reduction and to the county to the extent it represents a
140.34 property tax reduction. Any amount repaid to the state must be
140.35 deposited in the general fund. Any amount repaid to the county
140.36 for the property tax exemption must be distributed to the local
141.1 governments with authority to levy taxes in the zone in the same
141.2 manner provided for distribution of payment of delinquent
141.3 property taxes. Any repayment of local sales or use taxes must
141.4 be repaid to the jurisdiction imposing the local sales or use
141.5 tax.
141.6 Subd. 3. [REPAYMENT PROCEDURES.] (a) For the repayment of
141.7 taxes imposed under chapter 290 or 297A or local taxes collected
141.8 under section 297A.99, a person must file an amended return with
141.9 the commissioner of revenue and pay any taxes required to be
141.10 repaid within 30 days after ceasing to be a qualified business.
141.11 The amount required to be repaid is determined by calculating
141.12 the tax for the period for which repayment is required without
141.13 regard to the tax reductions allowed under section 469.324.
141.14 (b) For the repayment of property taxes, the county auditor
141.15 shall prepare a tax statement for the person, applying the
141.16 applicable tax extension rates for each payable year and provide
141.17 a copy to the business. The person must pay the taxes to the
141.18 county treasurer within 30 days after receipt of the tax
141.19 statement. The taxpayer may appeal the valuation and
141.20 determination of the property tax to the tax court within 30
141.21 days after receipt of the tax statement.
141.22 (c) The provisions of chapters 270 and 289A relating to the
141.23 commissioner of revenue's authority to audit, assess, and
141.24 collect the tax and to hear appeals apply to the repayment
141.25 required under paragraph (a). The commissioner may impose civil
141.26 penalties as provided in chapter 289A, and the additional tax
141.27 and penalties are subject to interest at the rate provided in
141.28 section 270.75, from 30 days after ceasing to do business in the
141.29 zone until the date the tax is paid.
141.30 (d) If a property tax is not repaid under paragraph (b),
141.31 the county treasurer shall add the amount required to be repaid
141.32 to the property taxes assessed against the property for payment
141.33 in the year following the year in which the treasurer discovers
141.34 that the person ceased to operate in the international economic
141.35 development zone.
141.36 (e) For determining the tax required to be repaid, a tax
142.1 reduction is deemed to have been received on the date that the
142.2 tax would have been due if the person had not been entitled to
142.3 the tax reduction.
142.4 (f) The commissioner of revenue may assess the repayment of
142.5 taxes under paragraph (c) at any time within two years after the
142.6 person ceases to be a qualified business, or within any period
142.7 of limitations for the assessment of tax under section 289A.38,
142.8 whichever is later.
142.9 Subd. 4. [WAIVER AUTHORITY.] The commissioner may waive
142.10 all or part of a repayment, if the commissioner of revenue, in
142.11 consultation with the foreign trade zone authority and
142.12 appropriate officials from the state and local government units,
142.13 determines that requiring repayment of the tax is not in the
142.14 best interest of the state or local government and the business
142.15 ceased operating as a result of circumstances beyond its
142.16 control, including, but not limited to:
142.17 (1) a natural disaster;
142.18 (2) unforeseen industry trends; or
142.19 (3) loss of a major supplier or customer.
142.20 [EFFECTIVE DATE.] This section is effective the day
142.21 following final enactment.
142.22 Sec. 11. [469.327] [REPORTING REQUIREMENTS.]
142.23 Before designation of an international economic development
142.24 zone under section 469.322, the foreign trade zone authority
142.25 shall establish performance goals for the zone. These goals
142.26 must set out, at a minimum, the amount of investment, the number
142.27 of jobs, and the amount of freight handled expected to be
142.28 attained at the end of three, five, and 10 year periods by the
142.29 zone. The authority must annually report to the commissioner of
142.30 the Department of Employment and Economic Development on its
142.31 progress in attaining these goals.
142.32 [EFFECTIVE DATE.] This section is effective the day
142.33 following final enactment.
142.34 ARTICLE 8
142.35 DEPARTMENT OF REVENUE POLICY PROVISIONS
142.36 Section 1. Minnesota Statutes 2002, section 16D.10, is
143.1 amended to read:
143.2 16D.10 [CASE REVIEWER.]
143.3 Subdivision 1. [DUTIES.] The commissioner shall make a
143.4 case reviewer available to debtors. The reviewer must be
143.5 available to answer a debtor's questions concerning the
143.6 collection process and to review the collection activity taken.
143.7 If the reviewer reasonably believes that the particular action
143.8 being taken is unreasonable or unfair, the reviewer may make
143.9 recommendations to the commissioner in regard to the collection
143.10 action.
143.11 Subd. 2. [AUTHORITY TO ISSUE DEBTOR ASSISTANCE ORDER.] On
143.12 application filed by a debtor with the case reviewer, in the
143.13 form, manner, and in the time prescribed by the commissioner,
143.14 and after thorough investigation, the case reviewer may issue a
143.15 debtor assistance order if, in the determination of the case
143.16 reviewer, the manner in which the state debt collection laws are
143.17 being administered is creating or will create an unjust and
143.18 inequitable result for the debtor. Debtor assistance orders are
143.19 governed by the provisions relating to taxpayer assistance
143.20 orders under section 270.273.
143.21 Subd. 3. [TRANSFER OF DUTIES TO TAXPAYER RIGHTS ADVOCATE.]
143.22 All duties and authority of the case reviewer under subdivisions
143.23 1 and 2 are transferred to the taxpayer rights advocate.
143.24 [EFFECTIVE DATE.] This section is effective the day
143.25 following final enactment.
143.26 Sec. 2. Minnesota Statutes 2002, section 270.02,
143.27 subdivision 3, is amended to read:
143.28 Subd. 3. [POWERS, ORGANIZATION, ASSISTANTS.] Subject to
143.29 the provisions of this chapter and other applicable laws the
143.30 commissioner shall have power to organize the department with
143.31 such divisions and other agencies as the commissioner deems
143.32 necessary and to appoint one deputy commissioner, a department
143.33 secretary, directors of divisions, and such other officers,
143.34 employees, and agents as the commissioner may deem necessary to
143.35 discharge the functions of the department, define the duties of
143.36 such officers, employees, and agents, and delegate to them any
144.1 of the commissioner's powers or duties, subject to the
144.2 commissioner's control and under such conditions as the
144.3 commissioner may prescribe. Appointments to exercise delegated
144.4 power to sign documents which require the signature of the
144.5 commissioner or a delegate by law shall be by written order
144.6 filed with the secretary of state. The delegations of authority
144.7 granted by the commissioner remain in effect until revoked by
144.8 the commissioner or a successor commissioner.
144.9 [EFFECTIVE DATE.] This section is effective the day
144.10 following final enactment.
144.11 Sec. 3. Minnesota Statutes 2003 Supplement, section
144.12 270.06, is amended to read:
144.13 270.06 [POWERS AND DUTIES.]
144.14 The commissioner of revenue shall:
144.15 (1) have and exercise general supervision over the
144.16 administration of the assessment and taxation laws of the state,
144.17 over assessors, town, county, and city boards of review and
144.18 equalization, and all other assessing officers in the
144.19 performance of their duties, to the end that all assessments of
144.20 property be made relatively just and equal in compliance with
144.21 the laws of the state;
144.22 (2) confer with, advise, and give the necessary
144.23 instructions and directions to local assessors and local boards
144.24 of review throughout the state as to their duties under the laws
144.25 of the state;
144.26 (3) direct proceedings, actions, and prosecutions to be
144.27 instituted to enforce the laws relating to the liability and
144.28 punishment of public officers and officers and agents of
144.29 corporations for failure or negligence to comply with the
144.30 provisions of the laws of this state governing returns of
144.31 assessment and taxation of property, and cause complaints to be
144.32 made against local assessors, members of boards of equalization,
144.33 members of boards of review, or any other assessing or taxing
144.34 officer, to the proper authority, for their removal from office
144.35 for misconduct or negligence of duty;
144.36 (4) require county attorneys to assist in the commencement
145.1 of prosecutions in actions or proceedings for removal,
145.2 forfeiture and punishment for violation of the laws of this
145.3 state in respect to the assessment and taxation of property in
145.4 their respective districts or counties;
145.5 (5) require town, city, county, and other public officers
145.6 to report information as to the assessment of property,
145.7 collection of taxes received from licenses and other sources,
145.8 and such other information as may be needful in the work of the
145.9 Department of Revenue, in such form and upon such blanks as the
145.10 commissioner may prescribe;
145.11 (6) require individuals, copartnerships, companies,
145.12 associations, and corporations to furnish information concerning
145.13 their capital, funded or other debt, current assets and
145.14 liabilities, earnings, operating expenses, taxes, as well as all
145.15 other statements now required by law for taxation purposes;
145.16 (7) subpoena witnesses, at a time and place reasonable
145.17 under the circumstances, to appear and give testimony, and to
145.18 produce books, records, papers and documents for inspection and
145.19 copying relating to any matter which the commissioner may have
145.20 authority to investigate or determine;
145.21 (8) issue a subpoena which does not identify the person or
145.22 persons with respect to whose liability the subpoena is issued,
145.23 but only if (a) the subpoena relates to the investigation of a
145.24 particular person or ascertainable group or class of persons,
145.25 (b) there is a reasonable basis for believing that such person
145.26 or group or class of persons may fail or may have failed to
145.27 comply with any law administered by the commissioner, (c) the
145.28 information sought to be obtained from the examination of the
145.29 records (and the identity of the person or persons with respect
145.30 to whose liability the subpoena is issued) is not readily
145.31 available from other sources, (d) the subpoena is clear and
145.32 specific as to the information sought to be obtained, and (e)
145.33 the information sought to be obtained is limited solely to the
145.34 scope of the investigation. Provided further that the party
145.35 served with a subpoena which does not identify the person or
145.36 persons with respect to whose tax liability the subpoena is
146.1 issued shall have the right, within 20 days after service of the
146.2 subpoena, to petition the district court for the judicial
146.3 district in which lies the county in which that party is located
146.4 for a determination as to whether the commissioner of revenue
146.5 has complied with all the requirements in (a) to (e), and thus,
146.6 whether the subpoena is enforceable. If no such petition is
146.7 made by the party served within the time prescribed, the
146.8 subpoena shall have the force and effect of a court order;
146.9 (9) cause the deposition of witnesses residing within or
146.10 without the state, or absent therefrom, to be taken, upon notice
146.11 to the interested party, if any, in like manner that depositions
146.12 of witnesses are taken in civil actions in the district court,
146.13 in any matter which the commissioner may have authority to
146.14 investigate or determine;
146.15 (10) investigate the tax laws of other states and countries
146.16 and to formulate and submit to the legislature such legislation
146.17 as the commissioner may deem expedient to prevent evasions of
146.18 assessment and taxing laws, and secure just and equal taxation
146.19 and improvement in the system of assessment and taxation in this
146.20 state;
146.21 (11) consult and confer with the governor upon the subject
146.22 of taxation, the administration of the laws in regard thereto,
146.23 and the progress of the work of the Department of Revenue, and
146.24 furnish the governor, from time to time, such assistance and
146.25 information as the governor may require relating to tax matters;
146.26 (12) transmit to the governor, on or before the third
146.27 Monday in December of each even-numbered year, and to each
146.28 member of the legislature, on or before November 15 of each
146.29 even-numbered year, the report of the Department of Revenue for
146.30 the preceding years, showing all the taxable property in the
146.31 state and the value of the same, in tabulated form;
146.32 (13) inquire into the methods of assessment and taxation
146.33 and ascertain whether the assessors faithfully discharge their
146.34 duties, particularly as to their compliance with the laws
146.35 requiring the assessment of all property not exempt from
146.36 taxation;
147.1 (14) administer and enforce the assessment and collection
147.2 of state taxes and fees, including the use of any remedy
147.3 available to nongovernmental creditors, and, from time to time,
147.4 make, publish, and distribute rules for the administration and
147.5 enforcement of laws administered by the commissioner and state
147.6 tax laws. The rules have the force of law;
147.7 (15) prepare blank forms for the returns required by state
147.8 tax law and distribute them throughout the state, furnishing
147.9 them subject to charge on application;
147.10 (16) prescribe rules governing the qualification and
147.11 practice of agents, attorneys, or other persons representing
147.12 taxpayers before the commissioner. The rules may require that
147.13 those persons, agents, and attorneys show that they are of good
147.14 character and in good repute, have the necessary qualifications
147.15 to give taxpayers valuable services, and are otherwise competent
147.16 to advise and assist taxpayers in the presentation of their case
147.17 before being recognized as representatives of taxpayers. After
147.18 due notice and opportunity for hearing, the commissioner may
147.19 suspend and bar from further practice before the commissioner
147.20 any person, agent, or attorney who is shown to be incompetent or
147.21 disreputable, who refuses to comply with the rules, or who with
147.22 intent to defraud, willfully or knowingly deceives, misleads, or
147.23 threatens a taxpayer or prospective taxpayer, by words,
147.24 circular, letter, or by advertisement. This clause does not
147.25 curtail the rights of individuals to appear in their own behalf
147.26 or partners or corporations' officers to appear in behalf of
147.27 their respective partnerships or corporations;
147.28 (17) appoint agents as the commissioner considers necessary
147.29 to make examinations and determinations. The agents have the
147.30 rights and powers conferred on the commissioner to subpoena,
147.31 examine, and copy books, records, papers, or memoranda, subpoena
147.32 witnesses, administer oaths and affirmations, and take
147.33 testimony. In addition to administrative subpoenas of the
147.34 commissioner and the agents, upon demand of the commissioner or
147.35 an agent, the court administrator of any district court shall
147.36 issue a subpoena for the attendance of a witness or the
148.1 production of books, papers, records, or memoranda before the
148.2 agent for inspection and copying. Disobedience of a court
148.3 administrator's subpoena shall be punished by the district court
148.4 of the district in which the subpoena is issued, or in the case
148.5 of a subpoena issued by the commissioner or an agent, by the
148.6 district court of the district in which the party served with
148.7 the subpoena is located, in the same manner as contempt of the
148.8 district court;
148.9 (18) appoint and employ additional help, purchase supplies
148.10 or materials, or incur other expenditures in the enforcement of
148.11 state tax laws as considered necessary. The salaries of all
148.12 agents and employees provided for in this chapter shall be fixed
148.13 by the appointing authority, subject to the approval of the
148.14 commissioner of administration;
148.15 (19) execute and administer any agreement with the
148.16 secretary of the treasury of the United States or a
148.17 representative of another state regarding the exchange of
148.18 information and administration of the tax laws;
148.19 (20) authorize the use of unmarked motor vehicles to
148.20 conduct seizures or criminal investigations pursuant to the
148.21 commissioner's authority; and
148.22 (21) exercise other powers and perform other duties
148.23 required of or imposed upon the commissioner of revenue by law;
148.24 and
148.25 (22) negotiate with other member states as to the amount of
148.26 the monetary allowance for sellers and certified service
148.27 providers who purchase certified software for sales tax
148.28 collection as described in the streamlined sales tax agreement.
148.29 [EFFECTIVE DATE.] This section is effective the day
148.30 following final enactment.
148.31 Sec. 4. [270.0611] [SUFFICIENCY OF NOTICE OF DETERMINATION
148.32 OR ACTION OF COMMISSIONER OF REVENUE.]
148.33 When a method of notification of a written determination or
148.34 action of the commissioner is not specifically provided for by
148.35 law, notice of the determination or action sent postage prepaid
148.36 by United States mail to the taxpayer or other person affected
149.1 by the determination or action at the taxpayer's or person's
149.2 last known address is sufficient. If the taxpayer or person
149.3 being notified is deceased or is under a legal disability, or if
149.4 a corporation being notified has terminated its existence,
149.5 notice to the last known address of the taxpayer, person, or
149.6 corporation is sufficient, unless the department has been
149.7 provided with a new address by a party authorized to receive
149.8 notices from the commissioner.
149.9 [EFFECTIVE DATE.] This section is effective for notices
149.10 sent on or after the day following final enactment.
149.11 Sec. 5. Minnesota Statutes 2002, section 270.69,
149.12 subdivision 4, is amended to read:
149.13 Subd. 4. [PERIOD OF LIMITATIONS.] The lien imposed by this
149.14 section shall, notwithstanding any other provision of law to the
149.15 contrary, be enforceable from the time the lien arises and for
149.16 ten years from the date of filing the notice of lien, which must
149.17 be filed by the commissioner within five years after the date of
149.18 assessment of the tax or final administrative or judicial
149.19 determination of the assessment. A notice of lien filed in one
149.20 county may be transcribed to the secretary of state or to any
149.21 other county within ten years after the date of its filing, but
149.22 the transcription shall not extend the period during which the
149.23 lien is enforceable. A notice of lien may be renewed by the
149.24 commissioner before the expiration of the ten-year period for an
149.25 additional ten years. The taxpayer must receive written notice
149.26 of the renewal.
149.27 [EFFECTIVE DATE.] This section is effective the day
149.28 following final enactment.
149.29 Sec. 6. Minnesota Statutes 2002, section 270B.01,
149.30 subdivision 8, is amended to read:
149.31 Subd. 8. [MINNESOTA TAX LAWS.] For purposes of this
149.32 chapter only, unless expressly stated otherwise, "Minnesota tax
149.33 laws" means:
149.34 (1) the taxes, refunds, and fees administered by or paid to
149.35 the commissioner under chapters 115B (except taxes imposed under
149.36 sections 115B.21 to 115B.24), 289A (except taxes imposed under
150.1 sections 298.01, 298.015, and 298.24), 290, 290A, 291, 295,
150.2 297A, and 297H, or any similar Indian tribal tax administered by
150.3 the commissioner pursuant to any tax agreement between the state
150.4 and the Indian tribal government, and includes any laws for the
150.5 assessment, collection, and enforcement of those taxes, refunds,
150.6 and fees; and
150.7 (2) section 273.1315.
150.8 [EFFECTIVE DATE.] This section is effective the day
150.9 following final enactment.
150.10 Sec. 7. Minnesota Statutes 2003 Supplement, section
150.11 270B.12, subdivision 13, is amended to read:
150.12 Subd. 13. [COUNTY ASSESSORS; CLASS 1B HOMESTEADS.] The
150.13 commissioner may disclose to a county assessor, and to the
150.14 assessor's designated agents or employees, a listing of parcels
150.15 of property qualifying for the class 1b property tax
150.16 classification under section 273.13, subdivision 22, and the
150.17 names and addresses of qualified applicants.
150.18 [EFFECTIVE DATE.] This section is effective the day
150.19 following final enactment.
150.20 Sec. 8. Minnesota Statutes 2003 Supplement, section
150.21 272.02, subdivision 65, is amended to read:
150.22 Subd. 65. [BIOTECHNOLOGY AND HEALTH SCIENCES INDUSTRY ZONE
150.23 PROPERTY.] (a) Improvements to real property, and personal
150.24 property, classified under section 273.13, subdivision 24, and
150.25 located within a biotechnology and health sciences industry zone
150.26 are exempt from ad valorem taxes levied under chapter 275, as
150.27 provided in this subdivision.
150.28 (b) For property to qualify for exemption under paragraph
150.29 (a), the occupant must be a qualified business, as defined in
150.30 section 469.330.
150.31 (c) The exemption applies beginning for the first
150.32 assessment year after designation of the biotechnology and
150.33 health sciences industry zone by the commissioner of employment
150.34 and economic development. The exemption applies to each
150.35 assessment year that begins during the duration of the
150.36 biotechnology and health sciences industry zone and to property
151.1 occupied by July 1 of the assessment year by a qualified
151.2 business. This exemption does not apply to:
151.3 (1) a levy under section 475.61 or similar levy provisions
151.4 under any other law to pay general obligation bonds; or
151.5 (2) a levy under section 126C.17, if the levy was approved
151.6 by the voters before the designation of the biotechnology and
151.7 health sciences industry zone.
151.8 (d) The exemption does not apply to taxes imposed by a
151.9 city, town, or county, unless the governing body adopts a
151.10 resolution granting the exemption. A city, town, or county may
151.11 provide a complete property tax exemption, partial property tax
151.12 exemption, or no property tax exemption to qualified businesses
151.13 in the biotechnology and health sciences industry zone. "City"
151.14 includes a statutory or home rule charter city.
151.15 (e) For property located in a tax increment financing
151.16 district, the county shall not adjust the original net tax
151.17 capacity of the district under section 469.177, subdivision 1,
151.18 paragraph (a), upon the expiration of an exemption under this
151.19 subdivision.
151.20 [EFFECTIVE DATE.] This section is effective beginning for
151.21 property taxes assessed in 2004, payable in 2005.
151.22 Sec. 9. Minnesota Statutes 2002, section 289A.12,
151.23 subdivision 3, is amended to read:
151.24 Subd. 3. [RETURNS OR REPORTS BY PARTNERSHIPS, FIDUCIARIES,
151.25 AND S CORPORATIONS.] (a) Partnerships must file a return with
151.26 the commissioner for each taxable year. The return must conform
151.27 to the requirements of section 290.311, and must include the
151.28 names and addresses of the partners entitled to a distributive
151.29 share in their taxable net income, gain, loss, or credit, and
151.30 the amount of the distributive share to which each is entitled.
151.31 A partnership required to file a return for a partnership
151.32 taxable year must furnish a copy of the information required to
151.33 be shown on the return to a person who is a partner at any time
151.34 during the taxable year, on or before the day on which the
151.35 return for the taxable year was filed. A partnership with more
151.36 than 100 partners that is required to file a federal partnership
152.1 return electronically under Code of Federal Regulations, title
152.2 26, section 301.6011-3 (2003), must also file the return due
152.3 under this section electronically. If a return required to be
152.4 filed electronically is filed on paper, the return is still
152.5 valid but a penalty of $50 for each partner over 100 partners is
152.6 imposed for failing to file electronically. The commissioner
152.7 may waive the penalty if the partnership can demonstrate that
152.8 filing the return electronically creates a hardship.
152.9 (b) The fiduciary of an estate or trust making the return
152.10 required to be filed under section 289A.08, subdivision 2, for a
152.11 taxable year must give a beneficiary who receives a distribution
152.12 from the estate or trust with respect to the taxable year or to
152.13 whom any item with respect to the taxable year is allocated, a
152.14 statement containing the information required to be shown on the
152.15 return, on or before the date on which the return was filed.
152.16 (c) An S corporation must file a return with the
152.17 commissioner for a taxable year during which an election under
152.18 section 290.9725 is in effect, stating specifically the names
152.19 and addresses of the persons owning stock in the corporation at
152.20 any time during the taxable year, the number of shares of stock
152.21 owned by a shareholder at all times during the taxable year, the
152.22 shareholder's pro rata share of each item of the corporation for
152.23 the taxable year, and other information the commissioner
152.24 requires. An S corporation required to file a return under this
152.25 paragraph for any taxable year must furnish a copy of the
152.26 information shown on the return to the person who is a
152.27 shareholder at any time during the taxable year, on or before
152.28 the day on which the return for the taxable year was filed.
152.29 (d) The partnership or S corporation return must be signed
152.30 by someone designated by the partnership or S corporation.
152.31 [EFFECTIVE DATE.] This section is effective for taxable
152.32 years beginning after December 31, 2003.
152.33 Sec. 10. Minnesota Statutes 2002, section 289A.31,
152.34 subdivision 2, is amended to read:
152.35 Subd. 2. [JOINT INCOME TAX RETURNS.] (a) If a joint income
152.36 tax return is made by a husband and wife, the liability for the
153.1 tax is joint and several. A spouse who qualifies for relief
153.2 from a liability attributable to an underpayment under section
153.3 6015(b) of the Internal Revenue Code is relieved of the state
153.4 income tax liability on the underpayment.
153.5 (b) In the case of individuals who were a husband and wife
153.6 prior to the dissolution of their marriage or their legal
153.7 separation, or prior to the death of one of the individuals, for
153.8 tax liabilities reported on a joint or combined return, the
153.9 liability of each person is limited to the proportion of the tax
153.10 due on the return that equals that person's proportion of the
153.11 total tax due if the husband and wife filed separate returns for
153.12 the taxable year. This provision is effective only when the
153.13 commissioner receives written notice of the marriage
153.14 dissolution, legal separation, or death of a spouse from the
153.15 husband or wife. No refund may be claimed by an ex-spouse,
153.16 legally separated or widowed spouse for any taxes paid more than
153.17 60 days before receipt by the commissioner of the written notice.
153.18 (c) A request for calculation of separate liability
153.19 pursuant to paragraph (b) for taxes reported on a return must be
153.20 made within six years after the due date of the return. For
153.21 calculation of separate liability for taxes assessed by the
153.22 commissioner under section 289A.35 or 289A.37, the request must
153.23 be made within six years after the date of assessment. The
153.24 commissioner is not required to calculate separate liability if
153.25 the remaining unpaid liability for which recalculation is
153.26 requested is $100 or less.
153.27 [EFFECTIVE DATE.] This section is effective for requests
153.28 for relief made on or after the day following final enactment.
153.29 Sec. 11. Minnesota Statutes 2002, section 289A.56, is
153.30 amended by adding a subdivision to read:
153.31 Subd. 7. [BIOTECHNOLOGY AND BORDER CITY ZONE
153.32 REFUNDS.] Notwithstanding subdivision 3, for refunds payable
153.33 under sections 297A.68, subdivision 38, and 469.1734,
153.34 subdivision 6, interest is computed from 90 days after the
153.35 refund claim is filed with the commissioner.
153.36 [EFFECTIVE DATE.] This section is effective for refund
154.1 claims filed on or after July 1, 2004.
154.2 Sec. 12. Minnesota Statutes 2003 Supplement, section
154.3 290.01, subdivision 19d, is amended to read:
154.4 Subd. 19d. [CORPORATIONS; MODIFICATIONS DECREASING FEDERAL
154.5 TAXABLE INCOME.] For corporations, there shall be subtracted
154.6 from federal taxable income after the increases provided in
154.7 subdivision 19c:
154.8 (1) the amount of foreign dividend gross-up added to gross
154.9 income for federal income tax purposes under section 78 of the
154.10 Internal Revenue Code;
154.11 (2) the amount of salary expense not allowed for federal
154.12 income tax purposes due to claiming the federal jobs credit
154.13 under section 51 of the Internal Revenue Code;
154.14 (3) any dividend (not including any distribution in
154.15 liquidation) paid within the taxable year by a national or state
154.16 bank to the United States, or to any instrumentality of the
154.17 United States exempt from federal income taxes, on the preferred
154.18 stock of the bank owned by the United States or the
154.19 instrumentality;
154.20 (4) amounts disallowed for intangible drilling costs due to
154.21 differences between this chapter and the Internal Revenue Code
154.22 in taxable years beginning before January 1, 1987, as follows:
154.23 (i) to the extent the disallowed costs are represented by
154.24 physical property, an amount equal to the allowance for
154.25 depreciation under Minnesota Statutes 1986, section 290.09,
154.26 subdivision 7, subject to the modifications contained in
154.27 subdivision 19e; and
154.28 (ii) to the extent the disallowed costs are not
154.29 represented by physical property, an amount equal to the
154.30 allowance for cost depletion under Minnesota Statutes 1986,
154.31 section 290.09, subdivision 8;
154.32 (5) the deduction for capital losses pursuant to sections
154.33 1211 and 1212 of the Internal Revenue Code, except that:
154.34 (i) for capital losses incurred in taxable years beginning
154.35 after December 31, 1986, capital loss carrybacks shall not be
154.36 allowed;
155.1 (ii) for capital losses incurred in taxable years beginning
155.2 after December 31, 1986, a capital loss carryover to each of the
155.3 15 taxable years succeeding the loss year shall be allowed;
155.4 (iii) for capital losses incurred in taxable years
155.5 beginning before January 1, 1987, a capital loss carryback to
155.6 each of the three taxable years preceding the loss year, subject
155.7 to the provisions of Minnesota Statutes 1986, section 290.16,
155.8 shall be allowed; and
155.9 (iv) for capital losses incurred in taxable years beginning
155.10 before January 1, 1987, a capital loss carryover to each of the
155.11 five taxable years succeeding the loss year to the extent such
155.12 loss was not used in a prior taxable year and subject to the
155.13 provisions of Minnesota Statutes 1986, section 290.16, shall be
155.14 allowed;
155.15 (6) an amount for interest and expenses relating to income
155.16 not taxable for federal income tax purposes, if (i) the income
155.17 is taxable under this chapter and (ii) the interest and expenses
155.18 were disallowed as deductions under the provisions of section
155.19 171(a)(2), 265 or 291 of the Internal Revenue Code in computing
155.20 federal taxable income;
155.21 (7) in the case of mines, oil and gas wells, other natural
155.22 deposits, and timber for which percentage depletion was
155.23 disallowed pursuant to subdivision 19c, clause (11), a
155.24 reasonable allowance for depletion based on actual cost. In the
155.25 case of leases the deduction must be apportioned between the
155.26 lessor and lessee in accordance with rules prescribed by the
155.27 commissioner. In the case of property held in trust, the
155.28 allowable deduction must be apportioned between the income
155.29 beneficiaries and the trustee in accordance with the pertinent
155.30 provisions of the trust, or if there is no provision in the
155.31 instrument, on the basis of the trust's income allocable to
155.32 each;
155.33 (8) for certified pollution control facilities placed in
155.34 service in a taxable year beginning before December 31, 1986,
155.35 and for which amortization deductions were elected under section
155.36 169 of the Internal Revenue Code of 1954, as amended through
156.1 December 31, 1985, an amount equal to the allowance for
156.2 depreciation under Minnesota Statutes 1986, section 290.09,
156.3 subdivision 7;
156.4 (9) amounts included in federal taxable income that are due
156.5 to refunds of income, excise, or franchise taxes based on net
156.6 income or related minimum taxes paid by the corporation to
156.7 Minnesota, another state, a political subdivision of another
156.8 state, the District of Columbia, or a foreign country or
156.9 possession of the United States to the extent that the taxes
156.10 were added to federal taxable income under section 290.01,
156.11 subdivision 19c, clause (1), in a prior taxable year;
156.12 (10) 80 percent of royalties, fees, or other like income
156.13 accrued or received from a foreign operating corporation or a
156.14 foreign corporation which is part of the same unitary business
156.15 as the receiving corporation;
156.16 (11) income or gains from the business of mining as defined
156.17 in section 290.05, subdivision 1, clause (a), that are not
156.18 subject to Minnesota franchise tax;
156.19 (12) the amount of handicap access expenditures in the
156.20 taxable year which are not allowed to be deducted or capitalized
156.21 under section 44(d)(7) of the Internal Revenue Code;
156.22 (13) the amount of qualified research expenses not allowed
156.23 for federal income tax purposes under section 280C(c) of the
156.24 Internal Revenue Code, but only to the extent that the amount
156.25 exceeds the amount of the credit allowed under section
156.26 290.068 or 469.339;
156.27 (14) the amount of salary expenses not allowed for federal
156.28 income tax purposes due to claiming the Indian employment credit
156.29 under section 45A(a) of the Internal Revenue Code;
156.30 (15) the amount of any refund of environmental taxes paid
156.31 under section 59A of the Internal Revenue Code;
156.32 (16) for taxable years beginning before January 1, 2008,
156.33 the amount of the federal small ethanol producer credit allowed
156.34 under section 40(a)(3) of the Internal Revenue Code which is
156.35 included in gross income under section 87 of the Internal
156.36 Revenue Code;
157.1 (17) for a corporation whose foreign sales corporation, as
157.2 defined in section 922 of the Internal Revenue Code, constituted
157.3 a foreign operating corporation during any taxable year ending
157.4 before January 1, 1995, and a return was filed by August 15,
157.5 1996, claiming the deduction under section 290.21, subdivision
157.6 4, for income received from the foreign operating corporation,
157.7 an amount equal to 1.23 multiplied by the amount of income
157.8 excluded under section 114 of the Internal Revenue Code,
157.9 provided the income is not income of a foreign operating
157.10 company;
157.11 (18) any decrease in subpart F income, as defined in
157.12 section 952(a) of the Internal Revenue Code, for the taxable
157.13 year when subpart F income is calculated without regard to the
157.14 provisions of section 614 of Public Law 107-147; and
157.15 (19) in each of the five tax years immediately following
157.16 the tax year in which an addition is required under subdivision
157.17 19c, clause (16), an amount equal to one-fifth of the delayed
157.18 depreciation. For purposes of this clause, "delayed
157.19 depreciation" means the amount of the addition made by the
157.20 taxpayer under subdivision 19c, clause (16). The resulting
157.21 delayed depreciation cannot be less than zero.
157.22 [EFFECTIVE DATE.] This section is effective for tax years
157.23 beginning after December 31, 2003.
157.24 Sec. 13. Minnesota Statutes 2002, section 290.9705,
157.25 subdivision 1, is amended to read:
157.26 Subdivision 1. [WITHHOLDING OF PAYMENTS TO OUT-OF-STATE
157.27 CONTRACTORS.] (a) In this section, "person" means a person,
157.28 corporation, or cooperative, the state of Minnesota and its
157.29 political subdivisions, and a city, county, and school district
157.30 in Minnesota.
157.31 (b) A person who in the regular course of business is
157.32 hiring, contracting, or having a contract with a nonresident
157.33 person or foreign corporation, as defined in Minnesota Statutes
157.34 1986, section 290.01, subdivision 5, to perform construction
157.35 work in Minnesota, shall deduct and withhold eight percent of
157.36 every payment cumulative calendar year payments to the
158.1 contractor if the contract exceeds or can reasonably be expected
158.2 to exceed $100,000 which exceed $50,000.
158.3 [EFFECTIVE DATE.] This section is effective for payments
158.4 made after December 31, 2004.
158.5 Sec. 14. Minnesota Statutes 2003 Supplement, section
158.6 290C.10, is amended to read:
158.7 290C.10 [WITHDRAWAL PROCEDURES.]
158.8 An approved claimant under the sustainable forest incentive
158.9 program for a minimum of four years may notify the commissioner
158.10 of the intent to terminate enrollment. Within 90 days of
158.11 receipt of notice to terminate enrollment, the commissioner
158.12 shall inform the claimant in writing, acknowledging receipt of
158.13 this notice and indicating the effective date of termination
158.14 from the sustainable forest incentive program. Termination of
158.15 enrollment in the sustainable forest incentive program occurs on
158.16 January 1 of the fifth calendar year that begins after receipt
158.17 by the commissioner of the termination notice. After the
158.18 commissioner issues an effective date of termination, a claimant
158.19 wishing to continue the land's enrollment in the sustainable
158.20 forest incentive program beyond the termination date must apply
158.21 for enrollment as prescribed in section 290C.04. A claimant who
158.22 withdraws a parcel of land from this program may not reenroll
158.23 the parcel for a period of three years. Within 90 days after
158.24 the termination date, the commissioner shall execute and
158.25 acknowledge a document releasing the land from the covenant
158.26 required under this chapter. The document must be mailed to the
158.27 claimant and is entitled to be recorded. The commissioner may
158.28 allow early withdrawal from the Sustainable Forest Incentive Act
158.29 without penalty in cases of condemnation when the state of
158.30 Minnesota, any local government unit, or any other entity which
158.31 has the right of eminent domain acquires title or possession to
158.32 the land for a public purpose notwithstanding the provisions of
158.33 this section. In the case of such acquisition, the commissioner
158.34 shall execute and acknowledge a document releasing the land
158.35 acquired by the state, local government unit, or other entity
158.36 from the covenant. All other enrolled land must remain in the
159.1 program.
159.2 [EFFECTIVE DATE.] This section is effective the day
159.3 following final enactment.
159.4 Sec. 15. Minnesota Statutes 2002, section 297A.995,
159.5 subdivision 6, is amended to read:
159.6 Subd. 6. [AGREEMENT REQUIREMENTS.] The commissioner of
159.7 revenue shall not enter into the agreement unless the agreement
159.8 requires each state to abide by the following requirements:
159.9 (a) [UNIFORM STATE RATE.] The agreement must set
159.10 restrictions to achieve more uniform state rates through the
159.11 following:
159.12 (1) limiting the number of state rates;
159.13 (2) eliminating maximums on the amount of state tax that is
159.14 due on a transaction; and
159.15 (3) eliminating thresholds on the application of state tax.
159.16 (b) [UNIFORM STANDARDS.] The agreement must establish
159.17 uniform standards for the following:
159.18 (1) the sourcing of transactions to taxing jurisdictions;
159.19 (2) the administration of exempt sales;
159.20 (3) the allowances a seller can take for bad debts; and
159.21 (4) sales and use tax returns and remittances.
159.22 (c) [UNIFORM DEFINITIONS.] The agreement must require
159.23 states to develop and adopt uniform definitions of sales and use
159.24 tax terms. The definitions must enable a state to preserve its
159.25 ability to make policy choices not inconsistent with the uniform
159.26 definitions.
159.27 (d) [CENTRAL REGISTRATION.] The agreement must provide a
159.28 central, electronic registration system that allows a seller to
159.29 register to collect and remit sales and use taxes for all
159.30 signatory states.
159.31 (e) [NO NEXUS ATTRIBUTION.] The agreement must provide
159.32 that registration with the central registration system and the
159.33 collection of sales and use taxes in the signatory states will
159.34 not be used as a factor in determining whether the seller has
159.35 nexus with a state for any tax.
159.36 (f) [LOCAL SALES AND USE TAXES.] The agreement must
160.1 provide for reduction of the burdens of complying with local
160.2 sales and use taxes through the following:
160.3 (1) restricting and eliminating variances between the state
160.4 and local tax bases;
160.5 (2) requiring states to administer any sales and use taxes
160.6 levied by local jurisdictions within the state so that sellers
160.7 collecting and remitting these taxes will not have to register
160.8 or file returns with, remit funds to, or be subject to
160.9 independent audits from local taxing jurisdictions;
160.10 (3) restricting the frequency of changes in the local sales
160.11 and use tax rates and setting effective dates for the
160.12 application of local jurisdictional boundary changes to local
160.13 sales and use taxes; and
160.14 (4) providing notice of changes in local sales and use tax
160.15 rates and of changes in the boundaries of local taxing
160.16 jurisdictions.
160.17 (g) [MONETARY ALLOWANCES.] The agreement must outline any
160.18 monetary allowances that are to be provided by the states to
160.19 sellers or certified service providers. The allowances must be
160.20 funded from the money collected by the seller or certified
160.21 service provider and must be subtracted by the seller or
160.22 certified service provider before remitting the tax collected to
160.23 the Department of Revenue.
160.24 (h) [STATE COMPLIANCE.] The agreement must require each
160.25 state to certify compliance with the terms of the agreement
160.26 prior to joining and to maintain compliance, under the laws of
160.27 the member state, with all provisions of the agreement while a
160.28 member.
160.29 (i) [CONSUMER PRIVACY.] The agreement must require each
160.30 state to adopt a uniform policy for certified service providers
160.31 that protects the privacy of consumers and maintains the
160.32 confidentiality of tax information.
160.33 (j) [ADVISORY COUNCILS.] The agreement must provide for
160.34 the appointment of an advisory council of private sector
160.35 representatives and an advisory council of nonmember state
160.36 representatives to consult with in the administration of the
161.1 agreement.
161.2 [EFFECTIVE DATE.] This section is effective the day
161.3 following final enactment.
161.4 Sec. 16. Minnesota Statutes 2002, section 469.1734,
161.5 subdivision 6, is amended to read:
161.6 Subd. 6. [SALES TAX EXEMPTION; EQUIPMENT; CONSTRUCTION
161.7 MATERIALS.] (a) The gross receipts from the sale of machinery
161.8 and equipment and repair parts are exempt from taxation under
161.9 chapter 297A, if the machinery and equipment:
161.10 (1) are used in connection with a trade or business;
161.11 (2) are placed in service in a city that is authorized to
161.12 designate a zone under section 469.1731, regardless of whether
161.13 the machinery and equipment are used in a zone; and
161.14 (3) have a useful life of 12 months or more.
161.15 (b) The gross receipts from the sale of construction
161.16 materials are exempt, if they are used to construct:
161.17 (1) a facility for use in a trade or business located in a
161.18 city that is authorized to designate a zone under section
161.19 469.1731, regardless of whether the facility is located in a
161.20 zone; or
161.21 (2) housing that is located in a zone.
161.22 The exemptions under this paragraph apply regardless of whether
161.23 the purchase is made by the owner, the user, or a contractor.
161.24 (c) A purchaser may claim an exemption under this
161.25 subdivision for tax on the purchases up to, but not exceeding:
161.26 (1) the amount of the tax credit certificates received from
161.27 the city, less
161.28 (2) any tax credit certificates used under the provisions
161.29 of subdivisions 4 and 5, and section 469.1732, subdivision 2.
161.30 (d) The tax on sales of items exempted under this
161.31 subdivision shall be imposed and collected as if the applicable
161.32 rate under section 297A.62 applied. Upon application by the
161.33 purchaser, on forms prescribed by the commissioner, a refund
161.34 equal to the tax paid shall be paid to the purchaser. The
161.35 application must include sufficient information to permit the
161.36 commissioner to verify the sales tax paid and the eligibility of
162.1 the claimant to receive the credit. No more than two
162.2 applications for refunds may be filed under this subdivision in
162.3 a calendar year. The provisions of section 289A.40 apply to the
162.4 refunds payable under this subdivision. There is annually
162.5 appropriated to the commissioner of revenue the amount required
162.6 to make the refunds, which must be deducted from the amount of
162.7 the city's allocation under section 469.169, subdivision 12,
162.8 that remains available and its limitation under section 469.1735.
162.9 The amount to be refunded shall bear interest at the rate in
162.10 section 270.76 from 90 days after the date the refund claim is
162.11 filed with the commissioner.
162.12 [EFFECTIVE DATE.] This section is effective for refund
162.13 claims filed on or after July 1, 2004.
162.14 Sec. 17. Minnesota Statutes 2003 Supplement, section
162.15 469.310, subdivision 11, is amended to read:
162.16 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business"
162.17 means a person carrying on a trade or business at a place of
162.18 business located within a job opportunity building zone. A
162.19 person is a qualified business only on those parcels of land for
162.20 which it has entered into a business subsidy agreement, as
162.21 required under section 469.313, with the appropriate local
162.22 government unit in which the parcels are located.
162.23 (b) A person that relocates a trade or business from
162.24 outside a job opportunity building zone into a zone is not a
162.25 qualified business, unless the business:
162.26 (1)(i) increases full-time employment in the first full
162.27 year of operation within the job opportunity building zone by at
162.28 least 20 percent measured relative to the operations that were
162.29 relocated and maintains the required level of employment for
162.30 each year the zone designation applies; or
162.31 (ii) makes a capital investment in the property located
162.32 within a zone equivalent to ten percent of the gross revenues of
162.33 operation that were relocated in the immediately preceding
162.34 taxable year; and
162.35 (2) enters a binding written agreement with the
162.36 commissioner that:
163.1 (i) pledges the business will meet the requirements of
163.2 clause (1);
163.3 (ii) provides for repayment of all tax benefits enumerated
163.4 under section 469.315 to the business under the procedures in
163.5 section 469.319, if the requirements of clause (1) are not met
163.6 for the taxable year or for taxes payable during the year in
163.7 which the requirements were not met; and
163.8 (iii) contains any other terms the commissioner determines
163.9 appropriate.
163.10 (c) A business is not a qualified business if, at its
163.11 location or locations in the zone, the business is primarily
163.12 engaged in making retail sales to purchasers who are physically
163.13 present at the business's zone location.
163.14 [EFFECTIVE DATE.] The amendment to paragraph (a) of this
163.15 section is effective retroactively from June 9, 2003. Paragraph
163.16 (c) of this section is effective the day following final
163.17 enactment and applies to any business entering a business
163.18 subsidy agreement for a job opportunity development zone after
163.19 that date.
163.20 Sec. 18. Minnesota Statutes 2003 Supplement, section
163.21 469.330, subdivision 11, is amended to read:
163.22 Subd. 11. [QUALIFIED BUSINESS.] (a) "Qualified business"
163.23 means a person carrying on a trade or business at a
163.24 biotechnology and health sciences industry facility located
163.25 within a biotechnology and health sciences industry zone. A
163.26 person is a qualified business only on those parcels of land for
163.27 which it has entered into a business subsidy agreement, as
163.28 required under section 469.333, with the appropriate local
163.29 government unit in which the parcels are located.
163.30 (b) A person that relocates a biotechnology and health
163.31 sciences industry facility from outside a biotechnology and
163.32 health sciences industry zone into a zone is not a qualified
163.33 business, unless the business:
163.34 (1)(i) increases full-time employment in the first full
163.35 year of operation within the biotechnology and health sciences
163.36 industry zone by at least 20 percent measured relative to the
164.1 operations that were relocated and maintains the required level
164.2 of employment for each year the zone designation applies; or
164.3 (ii) makes a capital investment in the property located
164.4 within a zone equivalent to ten percent of the gross revenues of
164.5 operation that were relocated in the immediately preceding
164.6 taxable year; and
164.7 (2) enters a binding written agreement with the
164.8 commissioner that:
164.9 (i) pledges the business will meet the requirements of
164.10 clause (1);
164.11 (ii) provides for repayment of all tax benefits enumerated
164.12 under section 469.336 to the business under the procedures in
164.13 section 469.340, if the requirements of clause (1) are not met;
164.14 and
164.15 (iii) contains any other terms the commissioner determines
164.16 appropriate.
164.17 [EFFECTIVE DATE.] This section is effective retroactively
164.18 from June 9, 2003.
164.19 Sec. 19. Minnesota Statutes 2003 Supplement, section
164.20 469.337, is amended to read:
164.21 469.337 [CORPORATE FRANCHISE TAX EXEMPTION.]
164.22 (a) A qualified business is exempt from taxation under
164.23 section 290.02, the alternative minimum tax under section
164.24 290.0921, and the minimum fee under section 290.0922, on the
164.25 portion of its income attributable to operations of a qualified
164.26 business within the biotechnology and health sciences industry
164.27 zone. This exemption is determined as follows:
164.28 (1) for purposes of the tax imposed under section 290.02,
164.29 by multiplying its taxable net income by its zone percentage and
164.30 subtracting the result in determining taxable income;
164.31 (2) for purposes of the alternative minimum tax under
164.32 section 290.0921, by multiplying its alternative minimum taxable
164.33 income by its zone percentage and reducing alternative minimum
164.34 taxable income by this amount; and
164.35 (3) for purposes of the minimum fee under section 290.0922,
164.36 by excluding zone property and payroll in the zone from the
165.1 computations of the fee. The qualified business is exempt from
165.2 the minimum fee if all of its property is located in the zone
165.3 and all of its payroll is zone payroll.
165.4 (b) No subtraction is allowed under this section in excess
165.5 of 20 percent of the sum of the corporation's biotechnology and
165.6 health sciences industry zone payroll and the adjusted basis of
165.7 the property at the time that the property is first used in the
165.8 biotechnology and health sciences industry zone by the
165.9 corporation.
165.10 (c) No reduction in tax is allowed in excess of the amount
165.11 allocated under section 469.335.
165.12 [EFFECTIVE DATE.] This section is effective for tax years
165.13 beginning after December 31, 2003.
165.14 Sec. 20. Minnesota Statutes 2002, section 473F.02,
165.15 subdivision 2, is amended to read:
165.16 Subd. 2. [AREA.] "Area" means the territory included
165.17 within the boundaries of Anoka, Carver, Dakota excluding the
165.18 city of Northfield, Hennepin, Ramsey, Scott excluding the city
165.19 of New Prague, and Washington Counties, excluding lands
165.20 constituting a major or an intermediate airport as defined under
165.21 section 473.625.
165.22 [EFFECTIVE DATE.] This section is effective for taxes
165.23 payable in 2005 and thereafter.
165.24 Sec. 21. [REPEALER.]
165.25 Laws 1975, chapter 287, section 5, and Laws 2003, chapter
165.26 127, article 9, section 9, subdivision 4, are repealed.
165.27 [EFFECTIVE DATE.] This section is effective without local
165.28 approval for taxes payable in 2005 and thereafter.
165.29 ARTICLE 9
165.30 MISCELLANEOUS
165.31 Section 1. Minnesota Statutes 2003 Supplement, section
165.32 16A.152, subdivision 2, is amended to read:
165.33 Subd. 2. [ADDITIONAL REVENUES; PRIORITY.] (a) If on the
165.34 basis of a forecast of general fund revenues and expenditures,
165.35 the commissioner of finance determines that there will be a
165.36 positive unrestricted budgetary general fund balance at the
166.1 close of the biennium, the commissioner of finance must allocate
166.2 money to the following accounts and purposes in priority order:
166.3 (1) the cash flow account established in subdivision 1
166.4 until that account reaches $350,000,000; and
166.5 (2) the budget reserve account established in subdivision
166.6 1a until that account reaches $653,000,000;
166.7 (3) the amount necessary to eliminate all or a portion of
166.8 the property tax revenue recognition shift in section 123B.75,
166.9 subdivision 5; and
166.10 (4) the amount necessary to increase the aid payment
166.11 schedule for school district aids and credits payments in
166.12 section 127A.45 to not more than 90 percent.
166.13 (b) The amounts necessary to meet the requirements of this
166.14 section are appropriated from the general fund within two weeks
166.15 after the forecast is released or, in the case of transfers
166.16 under paragraph (a), clauses (3) and (4), as necessary to meet
166.17 the appropriations schedules otherwise established in statute.
166.18 (c) To the extent that a positive unrestricted budgetary
166.19 general fund balance is projected, appropriations under this
166.20 section must be made before any transfer is made under section
166.21 16A.1522.
166.22 (d) The commissioner of finance shall certify the total
166.23 dollar amount of the reductions under paragraph (a), clauses (3)
166.24 and (4), to the commissioner of education. The commissioner of
166.25 education shall increase the aid payment percentage and reduce
166.26 the property tax shift percentage by these amounts and apply
166.27 those reductions to the current fiscal year and thereafter.
166.28 [EFFECTIVE DATE.] This section is effective the day
166.29 following final enactment.
166.30 Sec. 2. Minnesota Statutes 2002, section 168A.02,
166.31 subdivision 2, is amended to read:
166.32 Subd. 2. [NO VEHICLE REGISTRATION WITHOUT TITLE.] The
166.33 department shall not register or renew the registration of a
166.34 vehicle for which a certificate of title is required unless a
166.35 certificate of title has been issued to the owner or, an
166.36 application therefor has been delivered to and approved by the
167.1 department, or the vehicle has a Minnesota certificate of title
167.2 and is being held for resale by a dealer under section 168A.11.
167.3 Sec. 3. Minnesota Statutes 2002, section 168A.11,
167.4 subdivision 1, is amended to read:
167.5 Subdivision 1. [APPLICATION REQUIREMENTS UPON SUBSEQUENT
167.6 TRANSFER.] (a) If A dealer who buys a vehicle and holds it for
167.7 resale and procures the certificate of title from the owner, and
167.8 complies with subdivision 2 hereof, the dealer need not apply
167.9 for a certificate of title, but. Upon transferring the vehicle
167.10 to another person, other than by the creation of a security
167.11 interest, the dealer shall promptly execute the assignment and
167.12 warranty of title by a dealer, showing the names and addresses
167.13 of the transferee and of any secured party holding a security
167.14 interest created or reserved at the time of the resale, and the
167.15 date of the security agreement in the spaces provided therefor
167.16 on the certificate of title or secure reassignment.
167.17 (b) If a dealer elects to apply for a certificate of title
167.18 on a vehicle held for resale, the dealer need not register the
167.19 vehicle but shall pay one month's registration tax. If a dealer
167.20 elects to apply for a certificate of title on a vehicle held for
167.21 resale, the department shall not place any legend on the title
167.22 that no motor vehicle sales tax was paid by the dealer, but may
167.23 indicate on the title whether the vehicle is a new or used
167.24 vehicle.
167.25 (c) With respect to motor vehicles subject to the
167.26 provisions of section 325E.15, the dealer shall also, in the
167.27 space provided therefor on the certificate of title or secure
167.28 reassignment, state the true cumulative mileage registered on
167.29 the odometer or that the exact mileage is unknown if the
167.30 odometer reading is known by the transferor to be different from
167.31 the true mileage.
167.32 (c) (d) The transferee shall complete the application for
167.33 title section on the certificate of title or separate title
167.34 application form prescribed by the department. The dealer shall
167.35 mail or deliver the certificate to the registrar or deputy
167.36 registrar with the transferee's application for a new
168.1 certificate and appropriate taxes and fees, within ten business
168.2 days.
168.3 (e) With respect to vehicles sold to buyers who will remove
168.4 the vehicle from this state, the dealer shall remove any license
168.5 plates from the vehicle, issue a 31-day temporary permit
168.6 pursuant to section 168.091, and notify the registrar within 48
168.7 hours of the sale that the vehicle has been removed from this
168.8 state. The notification must be made in an electronic format
168.9 prescribed by the registrar. The dealer may contract with a
168.10 deputy registrar for the notification of sale to an out-of-state
168.11 buyer. The deputy registrar may charge a fee not to exceed $7
168.12 per transaction to provide this service.
168.13 Sec. 4. Minnesota Statutes 2002, section 168A.11,
168.14 subdivision 2, is amended to read:
168.15 Subd. 2. [PURCHASE RECEIPT NOTIFICATION ON VEHICLE HELD
168.16 FOR RESALE.] A dealer, on buying a vehicle for which the seller
168.17 does not present a certificate of title, shall at the time of
168.18 taking delivery of the vehicle execute a purchase receipt for
168.19 the vehicle in a format designated by the department, and
168.20 deliver a copy to the seller. In a format and at a time
168.21 prescribed by the registrar, the dealer shall notify the
168.22 registrar that the vehicle is being held for resale by the
168.23 dealer. Within 48 hours of acquiring a vehicle titled and
168.24 registered in Minnesota, a dealer shall notify the registrar
168.25 that the dealership is holding the vehicle for resale. The
168.26 notification must be made electronically as prescribed by the
168.27 registrar. The dealer may contract this service to a deputy
168.28 registrar and the registrar may charge a fee not to exceed $7
168.29 per transaction to provide this service.
168.30 Sec. 5. Minnesota Statutes 2002, section 168A.11, is
168.31 amended by adding a subdivision to read:
168.32 Subd. 4. [CENTRALIZED RECORD KEEPING.] Three or more new
168.33 motor vehicle dealers under common management or control may
168.34 designate to the department in writing a single location for
168.35 maintaining the records required by this section that are more
168.36 than 12 months old. The records must be open to inspection by a
169.1 representative of the department or a peace officer during
169.2 reasonable business hours. The location must be at the
169.3 established place of business of one of the affiliated dealers
169.4 or at a location within Minnesota not further than 25 miles from
169.5 the established place of business of one of the affiliated
169.6 dealers.
169.7 Sec. 6. Minnesota Statutes 2002, section 240.30, is
169.8 amended by adding a subdivision to read:
169.9 Subd. 11. [FRANCHISE FEE.] As a condition of operating a
169.10 card club under this section, the licensee must pay a fee to the
169.11 commission equal to five percent of the gross revenues, less any
169.12 refunds, for charges imposed under subdivision 4. Payment,
169.13 collection, and administration of the fee must be made in the
169.14 same manner and under the terms provided under section 240.15
169.15 for the tax on pari-mutuel pools. The commission shall deposit
169.16 all of the revenues from the fee in the state treasury and
169.17 amounts deposited must be credited to the general fund. The
169.18 amount of the fee under this subdivision does not reduce the
169.19 obligation to set aside revenues from the card club under
169.20 section 240.135.
169.21 [EFFECTIVE DATE.] This section is effective for charges and
169.22 revenues received after June 30, 2004.
169.23 Sec. 7. Minnesota Statutes 2003 Supplement, section
169.24 270.30, subdivision 1, is amended to read:
169.25 Subdivision 1. [SCOPE.] (a) This section applies to a
169.26 person who offers, provides, or facilitates the provision of
169.27 refund anticipation loans, as part of or in connection with the
169.28 provision of tax preparation services.
169.29 (b) This section does not apply to:
169.30 (1) a tax preparer who provides tax preparation services
169.31 for fewer than six clients in a calendar year;
169.32 (2) the provision by a person of tax preparation services
169.33 to a spouse, parent, grandparent, child, or sibling; and
169.34 (3) the provision of services by an employee for an
169.35 employer.
169.36 Sec. 8. Minnesota Statutes 2003 Supplement, section
170.1 270.30, subdivision 5, is amended to read:
170.2 Subd. 5. [ITEMIZED BILL REQUIRED.] A tax preparer who
170.3 provides services for a fee or other consideration must provide
170.4 an itemized statement of the charges for services, at least
170.5 separately stating the charges for:
170.6 (1) return preparation;
170.7 (2) electronic filing; and
170.8 (3) providing or facilitating a refund anticipation loan.
170.9 Sec. 9. Minnesota Statutes 2003 Supplement, section
170.10 270.30, subdivision 8, is amended to read:
170.11 Subd. 8. [EXEMPTIONS; ENFORCEMENT PROVISIONS.] The
170.12 provisions of subdivisions 3, 6, and 7 do not apply to:
170.13 (1) an attorney admitted to practice under section 481.01;
170.14 (2) a certified public accountant holding a certificate
170.15 under section 326A.04 or a person issued a permit to practice
170.16 under section 326A.05;
170.17 (3) a person designated as a registered accounting
170.18 practitioner under Minnesota Rules, part 1105.6600, or a
170.19 registered accounting practitioner firm issued a permit under
170.20 Minnesota Rules, part 1105.7100;
170.21 (4) an enrolled agent who has passed the special enrollment
170.22 examination administered by the Internal Revenue Service; and
170.23 (5) any fiduciary, or the regular employees of a fiduciary,
170.24 while acting on behalf of the fiduciary estate, the testator,
170.25 trustor, grantor, or beneficiaries of them;
170.26 (6) a tax preparer who provides tax preparation services
170.27 for fewer than six clients in a calendar year;
170.28 (7) a person who provides tax preparation services to a
170.29 spouse, parent, grandparent, child, or sibling; and
170.30 (8) an employee who provides tax preparation services for
170.31 an employer.
170.32 Sec. 10. Minnesota Statutes 2003 Supplement, section
170.33 291.03, subdivision 1, is amended to read:
170.34 Subdivision 1. [TAX AMOUNT.] (a) The tax imposed shall be
170.35 an amount equal to the proportion of the maximum credit computed
170.36 under section 2011 of the Internal Revenue Code, as amended
171.1 through December 31, 2000, for state death taxes as the
171.2 Minnesota gross estate bears to the value of the federal gross
171.3 estate. The tax determined under this paragraph shall not be
171.4 greater than the federal estate tax computed under section 2001
171.5 of the Internal Revenue Code after the allowance of the federal
171.6 credits allowed under section 2010 of the Internal Revenue Code
171.7 of 1986, as amended through December 31, 2000.
171.8 (b) For the purposes of this section, the following are not
171.9 allowed in computing the tax under this chapter:
171.10 (1) expenses which are deducted for federal income tax
171.11 purposes under section 642(g) of the Internal Revenue Code as
171.12 amended through December 31, 2002, are not allowable in
171.13 computing the tax under this chapter. 2003; and
171.14 (2) state death taxes which are deducted under section 2058
171.15 of the Internal Revenue Code as amended through December 31,
171.16 2003;
171.17 (c) For qualified terminable interest property, as defined
171.18 in section 2056(b)(7) of the Internal Revenue Code, the executor
171.19 may make an election for purposes of the tax under this chapter
171.20 that is different than the amount elected for federal estate tax
171.21 purposes. The election must be made on the return for tax under
171.22 this chapter and is irrevocable. All tax under this chapter
171.23 must be determined using the qualified terminable interest
171.24 property election made on the Minnesota return.
171.25 [EFFECTIVE DATE.] This section is effective for decedents
171.26 dying after December 31, 2004.
171.27 Sec. 11. Minnesota Statutes 2002, section 298.24,
171.28 subdivision 1, is amended to read:
171.29 Subdivision 1. (a) For concentrate produced in 2001, 2002,
171.30 and 2003, there is imposed upon taconite and iron sulphides, and
171.31 upon the mining and quarrying thereof, and upon the production
171.32 of iron ore concentrate therefrom, and upon the concentrate so
171.33 produced, a tax of $2.103 per gross ton of merchantable iron ore
171.34 concentrate produced therefrom.
171.35 (b) For concentrates produced in 2004 and subsequent years,
171.36 the tax rate shall be equal to the preceding year's tax rate
172.1 plus an amount equal to the preceding year's tax rate multiplied
172.2 by the percentage increase in the implicit price deflator from
172.3 the fourth quarter of the second preceding year to the fourth
172.4 quarter of the preceding year. "Implicit price deflator" means
172.5 the implicit price deflator for the gross domestic product
172.6 prepared by the Bureau of Economic Analysis of the United States
172.7 Department of Commerce.
172.8 (c) On concentrates produced in 1997 and thereafter, an
172.9 additional tax is imposed equal to three cents per gross ton of
172.10 merchantable iron ore concentrate for each one percent that the
172.11 iron content of the product exceeds 72 percent, when dried at
172.12 212 degrees Fahrenheit.
172.13 (d) The tax shall be imposed on the average of the
172.14 production for the current year and the previous two years. The
172.15 rate of the tax imposed will be the current year's tax rate.
172.16 This clause shall not apply in the case of the closing of a
172.17 taconite facility if the property taxes on the facility would be
172.18 higher if this clause and section 298.25 were not applicable.
172.19 (e) If the tax or any part of the tax imposed by this
172.20 subdivision is held to be unconstitutional, a tax of $2.103 per
172.21 gross ton of merchantable iron ore concentrate produced shall be
172.22 imposed.
172.23 (f) Consistent with the intent of this subdivision to
172.24 impose a tax based upon the weight of merchantable iron ore
172.25 concentrate, the commissioner of revenue may indirectly
172.26 determine the weight of merchantable iron ore concentrate
172.27 included in fluxed pellets by subtracting the weight of the
172.28 limestone, dolomite, or olivine derivatives or other basic flux
172.29 additives included in the pellets from the weight of the
172.30 pellets. For purposes of this paragraph, "fluxed pellets" are
172.31 pellets produced in a process in which limestone, dolomite,
172.32 olivine, or other basic flux additives are combined with
172.33 merchantable iron ore concentrate. No subtraction from the
172.34 weight of the pellets shall be allowed for binders, mineral and
172.35 chemical additives other than basic flux additives, or moisture.
172.36 (g)(1) Notwithstanding any other provision of this
173.1 subdivision, for the first two years of a plant's commercial
173.2 production of direct reduced ore, no tax is imposed under this
173.3 section. As used in this paragraph, "commercial production" is
173.4 production of more than 50,000 tons of direct reduced ore in the
173.5 current year or in any prior year, and "direct reduced ore" is
173.6 ore that results in a product that has an iron content of at
173.7 least 75 percent. For the third year of a plant's commercial
173.8 production of direct reduced ore, the rate to be applied to
173.9 direct reduced ore is 25 percent of the rate otherwise
173.10 determined under this subdivision. For the fourth
173.11 such commercial production year, the rate is 50 percent of the
173.12 rate otherwise determined under this subdivision; for the
173.13 fifth such commercial production year, the rate is 75 percent of
173.14 the rate otherwise determined under this subdivision; and for
173.15 all subsequent commercial production years, the full rate is
173.16 imposed.
173.17 (2) Subject to clause (1), production of direct reduced ore
173.18 in this state is subject to the tax imposed by this section, but
173.19 if that production is not produced by a producer of taconite or
173.20 iron sulfides, the production of taconite or iron sulfides
173.21 consumed in the production of direct reduced iron in this state
173.22 is not subject to the tax imposed by this section on taconite or
173.23 iron sulfides.
173.24 (3) Notwithstanding any other provision of this
173.25 subdivision, no tax is imposed under this section during the
173.26 facility's noncommercial production of direct reduced ore.
173.27 [EFFECTIVE DATE.] This section is effective for direct
173.28 reduced ore produced after the date of final enactment.
173.29 Sec. 12. Minnesota Statutes 2003 Supplement, section
173.30 469.335, is amended to read:
173.31 469.335 [APPLICATION FOR TAX BENEFITS.]
173.32 (a) To claim a tax credit or exemption against a state tax
173.33 under section 469.336, clauses (2) through (5), a business must
173.34 apply to the commissioner for a tax credit certificate. As a
173.35 condition of its application, the business must agree to furnish
173.36 information to the commissioner that is sufficient to verify the
174.1 eligibility for any credits or exemptions claimed. The total
174.2 amount of the state tax credits and exemptions allowed for the
174.3 specified period may not exceed the amount of the tax credit
174.4 certificates provided by the commissioner to the business. The
174.5 commissioner must verify to the commissioner of revenue the
174.6 amount of tax exemptions or credits for which each business is
174.7 eligible.
174.8 (b) A tax credit certificate issued under this section may
174.9 specify the particular tax exemptions or credits against a state
174.10 tax that the qualified business is eligible to claim under
174.11 section 469.336, clauses (2) through (5), and the amount of each
174.12 exemption or credit allowed.
174.13 (c) The commissioner may issue $1,000,000 $2,000,000 of tax
174.14 credits or exemptions in fiscal year 2004. Any tax credits or
174.15 exemptions not awarded in fiscal year 2004 may be awarded in
174.16 fiscal year 2005.
174.17 (d) A qualified business must use the tax credits or tax
174.18 exemptions granted under this section by the later of the end of
174.19 the state fiscal year or the taxpayer's tax year in which the
174.20 credits or exemptions are granted.
174.21 [EFFECTIVE DATE.] This section is effective the day
174.22 following final enactment.
174.23 Sec. 13. Laws 2000, chapter 391, section 1, subdivision 1,
174.24 is amended to read:
174.25 Subdivision 1. [TASK FORCE; MEMBERSHIP.] (a) The secretary
174.26 of state shall establish serve as the chair of a task force of
174.27 15 members to study and make recommendations for the
174.28 establishment of a system for the electronic filing and
174.29 recording of real estate documents. Members who are appointed
174.30 under this section shall serve for a term of two years
174.31 commencing on June 30, 2004. Upon expiration of their term,
174.32 members may be reappointed for an additional year by their
174.33 appointing authority. Two county board members to be appointed
174.34 by the Association of Minnesota Counties, including one board
174.35 member from within the seven-county metropolitan area, as
174.36 designated under Minnesota Statutes, section 16E.02, shall serve
175.1 as the vice-chairs of the task force. The task force must
175.2 include:
175.3 (1) two members of the senate appointed by the subcommittee
175.4 on committees of the committee on rules and administration and
175.5 two members of the house appointed by the speaker of the house;
175.6 (2) representatives of county recorders and other three
175.7 county government officials appointed by the Association of
175.8 County Officers, including one county recorder, one county
175.9 auditor, and one county treasurer;
175.10 (2) the commissioner of administration or the designee of
175.11 the commissioner;
175.12 (3) seven members from the private sector appointed by the
175.13 chair, including representatives of:
175.14 (i) real estate attorneys, real estate agents, and public
175.15 and private land surveyors;
175.16 (4) representatives of (ii) title companies, mortgage
175.17 companies, and other real estate lenders; and
175.18 (5) a representative of the Minnesota historical society
175.19 and other state and local government archivists;
175.20 (6) (iii) technical and industry experts in electronic
175.21 commerce and electronic records management and preservation; and
175.22 (7) representatives of federal government-sponsored
175.23 enterprises active in the real estate industry;
175.24 (8) the commissioner of revenue; and
175.25 (9) other members appointed by the secretary of state
175.26 (4) a representative selected by the Minnesota Historical
175.27 Society.
175.28 (b) The task force may refer items to subcommittees. The
175.29 chair shall appoint the membership of a subcommittee. An
175.30 individual may be appointed to serve on a subcommittee without
175.31 serving on the task force.
175.32 (c) Any member of the task force representing a
175.33 jurisdiction or private interest receiving funding from the task
175.34 force in any way must resign from the task force and be replaced
175.35 by the member's appointing authority.
175.36 Sec. 14. Laws 2000, chapter 391, section 1, subdivision 2,
176.1 as amended by Laws 2002, chapter 365, section 5, is amended to
176.2 read:
176.3 Subd. 2. [STUDY AND RECOMMENDATIONS.] The task force shall
176.4 study and make recommendations regarding implementation of a
176.5 system for electronic filing and recording of real estate
176.6 documents and shall consider:
176.7 (1) technology and computer needs;
176.8 (2) legal issues such as authenticity, security, timing and
176.9 priority of recordings, and the relationship between electronic
176.10 and paper recording systems;
176.11 (3) cost-effectiveness of electronic recording systems;
176.12 (4) timetable and plan for implementing an electronic
176.13 recording system, considering types of documents and entities
176.14 using the system and volume of recordings;
176.15 (5) permissive versus mandatory systems; and
176.16 (6) other relevant issues identified by the task force.
176.17 The task force shall submit a report to the legislature by
176.18 January 15, 2001, outlining a proposed work plan and budget for
176.19 consideration by the legislature. By January 15, 2005, the task
176.20 force shall provide an updated report to the legislature
176.21 containing a revised work plan and budget. The task force
176.22 expires June 30, 2004 2007.
176.23 Sec. 15. Laws 2001, First Special Session chapter 10,
176.24 article 2, section 77, the effective date, as amended by Laws
176.25 2002, chapter 365, section 7, is amended to read:
176.26 [EFFECTIVE DATE.] This section is effective only between
176.27 August 1, 2001, and June 30, 2004 2007.
176.28 Sec. 16. Laws 2002, chapter 365, section 9, is amended to
176.29 read:
176.30 Sec. 9. [EFFECTIVE DATES AND APPLICATION.]
176.31 The amendments made by sections 3 and 4 are effective until
176.32 June 30, 2004 2007, for documents last acknowledged ten or more
176.33 days after the date of final enactment of this act; or filed 45
176.34 days or more after the date of final enactment. Sections 6 to 8
176.35 are effective the day following final enactment.
176.36 Sec. 17. Laws 2003, First Special Session chapter 1,
177.1 article 2, section 123, is amended to read:
177.2 Sec. 123. [REAL ESTATE FILING SURCHARGE.]
177.3 All funds collected during the fiscal year ending June 30,
177.4 2007, the fiscal year ending June 30, 2006, the fiscal year
177.5 ending June 30, 2005, the fiscal year ending June 30, 2004, and
177.6 funds collected in the fiscal year ending June 30, 2003, that
177.7 carry forward into the fiscal year ending June 30, 2004,
177.8 pursuant to the additional 50-cent surcharges imposed by Laws
177.9 2001, First Special Session chapter 10, article 2, section 77,
177.10 and Laws 2002, chapter 365, as amended by this act, are
177.11 appropriated to the legislative coordinating commission for the
177.12 real estate task force established by Laws 2000, chapter 391,
177.13 for the purposes set forth in Laws 2001, First Special Session
177.14 chapter 10, article 2, sections 98 to 101. $25,000 in each
177.15 fiscal year from those funds are to be retained by the
177.16 legislative coordinating commission for the services described
177.17 in Laws 2001, First Special Session chapter 10, article 2,
177.18 section 99.
177.19 Sec. 18. [TASK FORCE TRANSITION.]
177.20 The members of the electronic real estate document task
177.21 force created in Laws 2000, chapter 391, section 1, who are
177.22 serving on the task force on the effective date of this act
177.23 shall end their service on that date unless reappointed or
177.24 designated under section 13.
177.25 Sec. 19. [GAMING MACHINES; IN-LIEU TAX; CONTRACTS.]
177.26 If a bill providing for gaming machines at a racetrack is
177.27 enacted in a 2004 regular or special session, then,
177.28 notwithstanding any other law to the contrary:
177.29 (1) from July 1, 2005, to June 30, 2007, the state lottery
177.30 must on or before the 20th day of each month transmit to the
177.31 commissioner of revenue an amount equal to at least the adjusted
177.32 gross revenue from the operation of gaming machines multiplied
177.33 by 36.7 percent; and
177.34 (2) from July 1, 2005, to June 30, 2007, contracts for the
177.35 location of gaming machines must provide for compensation to the
177.36 racetrack in an amount equal to 48.3 percent of adjusted gross
178.1 gaming machine revenue.
178.2 [EFFECTIVE DATE.] This section is effective at the same
178.3 time as any bill that provides for gaming machines at a
178.4 racetrack and is enacted in a 2004 regular or special session.
178.5 Sec. 20. [FUNDS TRANSFER.]
178.6 Subdivision 1. [BUDGET RESERVE TO CASH FLOW.] On July 2,
178.7 2004, the commissioner of finance shall transfer $350,000,000
178.8 from the general fund budget reserve account under Minnesota
178.9 Statutes, section 16A.152, subdivision 1a, to the cash flow
178.10 reserve account under Minnesota Statutes, section 16A.152,
178.11 subdivision 1.
178.12 Subd. 2. [GENERAL FUND TO BUDGET RESERVE.] On or before
178.13 July 2, 2004, the commissioner of finance shall transfer
178.14 $8,566,000 from the general fund to the budget reserve account
178.15 under Minnesota Statutes, section 16A.152, subdivision 1a.
178.16 Sec. 21. [FEDERAL FUNDS.]
178.17 The first $167,000,000 of the general fund appropriation in
178.18 fiscal year 2004 for general education aid is from general
178.19 revenue sharing with states and their local governments provided
178.20 to Minnesota in the 2003 Jobs and Growth Tax Relief
178.21 Reconciliation Act.
178.22 Sec. 22. [APPROPRIATIONS.]
178.23 Subdivision 1. [TAX COMPLIANCE INITIATIVE.] (a) $3,678,000
178.24 is appropriated to the commissioner of revenue in fiscal year
178.25 2005 for additional activities to identify and collect tax
178.26 liabilities from individuals and businesses that currently do
178.27 not pay all taxes owed. $800,000 of this amount is for
178.28 corporate compliance related to foreign operating corporations.
178.29 $120,000 of this amount is considered a onetime appropriation.
178.30 The base for this additional activity is $3,558,000 per year.
178.31 (b) This initiative is expected to result in new general
178.32 fund revenues of $16,000,000 for the biennium ending June 30,
178.33 2005, and $16,000,000 annually thereafter.
178.34 (c) The commissioner must provide written reports to the
178.35 chairs of the house Taxes and senate Taxes Committees, and to
178.36 the chairs of the house and senate committees with jurisdiction
179.1 over state government finance, in compliance with Minnesota
179.2 Statutes, sections 3.195 and 3.197, by March 1, 2005, and
179.3 January 15, 2006. The reports must address the following
179.4 performance indicators:
179.5 (1) the number of corporations noncompliant with the
179.6 corporate tax system each year and the percentage and dollar
179.7 amounts of valid tax liabilities collected;
179.8 (2) the number of businesses noncompliant with the sales
179.9 and use tax system and the percentage and dollar amounts of the
179.10 valid tax liabilities collected; and
179.11 (3) the number of insurers, agents, or others that are
179.12 noncompliant with insurance tax statutes and cases resolved and
179.13 the percentage and dollar amounts of valid tax liabilities
179.14 collected.
179.15 The reports must also identify base level expenditures and
179.16 staff positions related to compliance and audit activities,
179.17 including baseline information as of January 1, 2002. The
179.18 reports must provide this information at the budget activity
179.19 level.
179.20 Subd. 2. [PROPERTY TAX REFUND STUDY.] $50,000 is
179.21 appropriated from the general fund for fiscal year 2005 to the
179.22 commissioner of revenue for the study of the percentage that
179.23 property taxes constitute of rent. This is a onetime
179.24 appropriation and is not added to the base.
179.25 Subd. 3. [INCOME AND HOME VALUE DATASET.] $50,000 is
179.26 appropriated from the general fund for fiscal year 2005 to the
179.27 commissioner of revenue to prepare a dataset linking homeowners'
179.28 incomes and the estimated market values of their homes. The
179.29 commissioner shall prepare the dataset using Minnesota tax data
179.30 gathered directly from taxpayers, counties, and sources other
179.31 than the Internal Revenue Service. This is a onetime
179.32 appropriation and is not added to the base.
179.33 Sec. 23. [EFFECTIVE DATE.]
179.34 Sections 13 to 18 are effective the day following final
179.35 enactment.
179.36 ARTICLE 10
180.1 PROPERTY TAXES TECHNICAL
180.2 Section 1. Minnesota Statutes 2003 Supplement, section
180.3 4A.02, is amended to read:
180.4 4A.02 [STATE DEMOGRAPHER.]
180.5 (a) The director shall appoint a state demographer. The
180.6 demographer must be professionally competent in demography and
180.7 must possess demonstrated ability based upon past performance.
180.8 (b) The demographer shall:
180.9 (1) continuously gather and develop demographic data
180.10 relevant to the state;
180.11 (2) design and test methods of research and data
180.12 collection;
180.13 (3) periodically prepare population projections for the
180.14 state and designated regions and periodically prepare
180.15 projections for each county or other political subdivision of
180.16 the state as necessary to carry out the purposes of this
180.17 section;
180.18 (4) review, comment on, and prepare analysis of population
180.19 estimates and projections made by state agencies, political
180.20 subdivisions, other states, federal agencies, or nongovernmental
180.21 persons, institutions, or commissions;
180.22 (5) serve as the state liaison with the United States
180.23 Bureau of the Census, coordinate state and federal demographic
180.24 activities to the fullest extent possible, and aid the
180.25 legislature in preparing a census data plan and form for each
180.26 decennial census;
180.27 (6) compile an annual study of population estimates on the
180.28 basis of county, regional, or other political or geographical
180.29 subdivisions as necessary to carry out the purposes of this
180.30 section and section 4A.03;
180.31 (7) by January 1 of each year, issue a report to the
180.32 legislature containing an analysis of the demographic
180.33 implications of the annual population study and population
180.34 projections;
180.35 (8) prepare maps for all counties in the state, all
180.36 municipalities with a population of 10,000 or more, and other
181.1 municipalities as needed for census purposes, according to scale
181.2 and detail recommended by the United States Bureau of the
181.3 Census, with the maps of cities showing precinct boundaries;
181.4 (9) prepare an estimate of population and of the number of
181.5 households for each governmental subdivision for which the
181.6 Metropolitan Council does not prepare an annual estimate, and
181.7 convey the estimates to the governing body of each political
181.8 subdivision by May June 1 of each year;
181.9 (10) direct, under section 414.01, subdivision 14, and
181.10 certify population and household estimates of annexed or
181.11 detached areas of municipalities or towns after being notified
181.12 of the order or letter of approval by the director;
181.13 (11) prepare, for any purpose for which a population
181.14 estimate is required by law or needed to implement a law, a
181.15 population estimate of a municipality or town whose population
181.16 is affected by action under section 379.02 or 414.01,
181.17 subdivision 14; and
181.18 (12) prepare an estimate of average household size for each
181.19 statutory or home rule charter city with a population of 2,500
181.20 or more by May June 1 of each year.
181.21 (c) A governing body may challenge an estimate made under
181.22 paragraph (b) by filing their specific objections in writing
181.23 with the state demographer by June 10 24. If the challenge does
181.24 not result in an acceptable estimate by June 24, the governing
181.25 body may have a special census conducted by the United States
181.26 Bureau of the Census. The political subdivision must notify the
181.27 state demographer by July 1 of its intent to have the special
181.28 census conducted. The political subdivision must bear all costs
181.29 of the special census. Results of the special census must be
181.30 received by the state demographer by the next April 15 to be
181.31 used in that year's May June 1 estimate to the political
181.32 subdivision under paragraph (b).
181.33 (d) The state demographer shall certify the estimates of
181.34 population and number of households to the commissioner of
181.35 revenue by July 15 each year, including any estimates still
181.36 under objection. No changes in population or household
182.1 estimates made after July 15 in an aid calculation year shall be
182.2 considered in determining aids under sections 477A.011 to
182.3 477A.014. Clerical errors in certification or use of the
182.4 estimates and counts established as of July 15 in the aid
182.5 calculation year are subject to correction under section
182.6 477A.014.
182.7 [EFFECTIVE DATE.] This section is effective the day
182.8 following final enactment.
182.9 Sec. 2. Minnesota Statutes 2003 Supplement, section
182.10 168A.05, subdivision 1a, is amended to read:
182.11 Subd. 1a. [MANUFACTURED HOME; STATEMENT OF PROPERTY TAX
182.12 PAYMENT.] In the case of a manufactured home as defined in
182.13 section 327.31, subdivision 6, the department shall not issue a
182.14 certificate of title unless the application under section
182.15 168A.04 is accompanied with a statement from the county auditor
182.16 or county treasurer where the manufactured home is presently
182.17 located, stating that all manufactured home personal property
182.18 taxes levied on the unit in the name of the current owner at the
182.19 time of transfer have been paid. For this purpose, manufactured
182.20 home personal property taxes are treated as levied on January 1
182.21 of the payable year.
182.22 [EFFECTIVE DATE.] This section is effective the day
182.23 following final enactment.
182.24 Sec. 3. Minnesota Statutes 2002, section 270B.12,
182.25 subdivision 9, is amended to read:
182.26 Subd. 9. [COUNTY ASSESSORS; HOMESTEAD APPLICATION,
182.27 DETERMINATION, AND INCOME TAX STATUS.] (a) If, as a result of an
182.28 audit, the commissioner determines that a person is a Minnesota
182.29 nonresident or part-year resident for income tax purposes, the
182.30 commissioner may disclose the person's name, address, and Social
182.31 Security number to the assessor of any political subdivision in
182.32 the state, when there is reason to believe that the person may
182.33 have claimed or received homestead property tax benefits for a
182.34 corresponding assessment year in regard to property apparently
182.35 located in the assessor's jurisdiction.
182.36 (b) To the extent permitted by section 273.124, subdivision
183.1 1, paragraph (a), the Department of Revenue may verify to a
183.2 county assessor whether an individual who is requesting or
183.3 receiving a homestead classification has filed a Minnesota
183.4 income tax return as a resident for the most recent taxable year
183.5 for which the information is available.
183.6 [EFFECTIVE DATE.] This section is effective the day
183.7 following final enactment.
183.8 Sec. 4. Minnesota Statutes 2002, section 272.01,
183.9 subdivision 2, is amended to read:
183.10 Subd. 2. (a) When any real or personal property which is
183.11 exempt from ad valorem taxes, and taxes in lieu thereof, is
183.12 leased, loaned, or otherwise made available and used by a
183.13 private individual, association, or corporation in connection
183.14 with a business conducted for profit, there shall be imposed a
183.15 tax, for the privilege of so using or possessing such real or
183.16 personal property, in the same amount and to the same extent as
183.17 though the lessee or user was the owner of such property.
183.18 (b) The tax imposed by this subdivision shall not apply to:
183.19 (1) property leased or used as a concession in or relative
183.20 to the use in whole or part of a public park, market,
183.21 fairgrounds, port authority, economic development authority
183.22 established under chapter 469, municipal auditorium, municipal
183.23 parking facility, municipal museum, or municipal stadium;
183.24 (2) property of an airport owned by a city, town, county,
183.25 or group thereof which is:
183.26 (i) leased to or used by any person or entity including a
183.27 fixed base operator; and
183.28 (ii) used as a hangar for the storage or repair of aircraft
183.29 or to provide aviation goods, services, or facilities to the
183.30 airport or general public;
183.31 the exception from taxation provided in this clause does not
183.32 apply to:
183.33 (i) property located at an airport owned or operated by the
183.34 Metropolitan Airports Commission or by a city of over 50,000
183.35 population according to the most recent federal census or such a
183.36 city's airport authority;
184.1 (ii) hangars leased by a private individual, association,
184.2 or corporation in connection with a business conducted for
184.3 profit other than an aviation-related business; or
184.4 (iii) facilities leased by a private individual,
184.5 association, or corporation in connection with a business for
184.6 profit, that consists of a major jet engine repair facility
184.7 financed, in whole or part, with the proceeds of state bonds and
184.8 located in a tax increment financing district;
184.9 (3) property constituting or used as a public pedestrian
184.10 ramp or concourse in connection with a public airport; or
184.11 (4) property constituting or used as a passenger check-in
184.12 area or ticket sale counter, boarding area, or luggage claim
184.13 area in connection with a public airport but not the airports
184.14 owned or operated by the Metropolitan Airports Commission or
184.15 cities of over 50,000 population or an airport authority
184.16 therein. Real estate owned by a municipality in connection with
184.17 the operation of a public airport and leased or used for
184.18 agricultural purposes is not exempt;
184.19 (5) property leased, loaned, or otherwise made available to
184.20 a private individual, corporation, or association under a
184.21 cooperative farming agreement made pursuant to section 97A.135;
184.22 or
184.23 (6) property leased, loaned, or otherwise made available to
184.24 a private individual, corporation, or association under section
184.25 272.68, subdivision 4.
184.26 (c) Taxes imposed by this subdivision are payable as in the
184.27 case of personal property taxes and shall be assessed to the
184.28 lessees or users of real or personal property in the same manner
184.29 as taxes assessed to owners of real or personal property, except
184.30 that such taxes shall not become a lien against the property.
184.31 When due, the taxes shall constitute a debt due from the lessee
184.32 or user to the state, township, city, county, and school
184.33 district for which the taxes were assessed and shall be
184.34 collected in the same manner as personal property taxes. If
184.35 property subject to the tax imposed by this subdivision is
184.36 leased or used jointly by two or more persons, each lessee or
185.1 user shall be jointly and severally liable for payment of the
185.2 tax.
185.3 (d) The tax on real property of the state or any of its
185.4 political subdivisions that is leased by a private individual,
185.5 association, or corporation and becomes taxable under this
185.6 subdivision or other provision of law must be assessed and
185.7 collected as a personal property assessment. The taxes do not
185.8 become a lien against the real property.
185.9 [EFFECTIVE DATE.] This section is effective the day
185.10 following final enactment.
185.11 Sec. 5. Minnesota Statutes 2002, section 272.02,
185.12 subdivision 1a, is amended to read:
185.13 Subd. 1a. [LIMITATIONS ON EXEMPTIONS.] The exemptions
185.14 granted by subdivision 1 are subject to the limits contained in
185.15 the other subdivisions of this section, section 272.025, or
185.16 273.13, subdivision 25, paragraph (c), clause (1) or (2), or
185.17 paragraph (d), clause (2) and all other provisions of applicable
185.18 law.
185.19 [EFFECTIVE DATE.] This section is effective the day
185.20 following final enactment.
185.21 Sec. 6. Minnesota Statutes 2002, section 272.02,
185.22 subdivision 7, is amended to read:
185.23 Subd. 7. [INSTITUTIONS OF PUBLIC CHARITY.] Institutions of
185.24 purely public charity are exempt except parcels of property
185.25 containing structures and the structures described in section
185.26 273.13, subdivision 25, paragraph (e), other than those that
185.27 qualify for exemption under subdivision 26. In determining
185.28 whether rental housing property qualifies for exemption under
185.29 this subdivision, the following are not gifts or donations to
185.30 the owner of the rental housing:
185.31 (1) rent assistance provided by the government to or on
185.32 behalf of tenants, and
185.33 (2) financing assistance or tax credits provided by the
185.34 government to the owner on condition that specific units or a
185.35 specific quantity of units be set aside for persons or families
185.36 with certain income characteristics.
186.1 [EFFECTIVE DATE.] This section is effective for taxes
186.2 payable in 2004 and thereafter.
186.3 Sec. 7. Minnesota Statutes 2002, section 272.02, is
186.4 amended by adding a subdivision to read:
186.5 Subd. 68. [PROPERTY SUBJECT TO TACONITE PRODUCTION TAX OR
186.6 NET PROCEEDS TAX.] (a) Except for mineral interests taxed under
186.7 section 273.165, and except for lands taxed under section
186.8 298.26, real and personal property described in section 298.25
186.9 is exempt to the extent the tax on taconite and iron sulphides
186.10 under section 298.24 is described in section 298.25 as being in
186.11 lieu of other taxes on such property. This exemption applies
186.12 for taxes payable in each year that the tax under section 298.24
186.13 is payable with respect to such property.
186.14 (b) Except for mineral interests taxed under section
186.15 273.165, deposits of mineral, metal, or energy resources the
186.16 mining of which is subject to taxation under section 298.015 are
186.17 exempt. This exemption applies for taxes payable in each year
186.18 that the tax under section 298.015 is payable with respect to
186.19 such property.
186.20 [EFFECTIVE DATE.] This section is effective the day
186.21 following final enactment.
186.22 Sec. 8. Minnesota Statutes 2002, section 272.02, is
186.23 amended by adding a subdivision to read:
186.24 Subd. 69. [RELIGIOUS CORPORATIONS.] Personal and real
186.25 property that a religious corporation, formed under section
186.26 317A.909, necessarily uses for a religious purpose is exempt to
186.27 the extent provided in section 317A.909, subdivision 3.
186.28 [EFFECTIVE DATE.] This section is effective the day
186.29 following final enactment.
186.30 Sec. 9. Minnesota Statutes 2002, section 272.02, is
186.31 amended by adding a subdivision to read:
186.32 Subd. 70. [CHILDREN'S HOMES.] Personal and real property
186.33 owned by a corporation formed under section 317A.907 is exempt
186.34 to the extent provided in section 317A.907, subdivision 7.
186.35 [EFFECTIVE DATE.] This section is effective the day
186.36 following final enactment.
187.1 Sec. 10. Minnesota Statutes 2002, section 272.02, is
187.2 amended by adding a subdivision to read:
187.3 Subd. 71. [HOUSING AND REDEVELOPMENT AUTHORITY AND TRIBAL
187.4 HOUSING AUTHORITY PROPERTY.] Property owned by a housing and
187.5 redevelopment authority described in chapter 469, or by a
187.6 designated housing authority described in section 469.040,
187.7 subdivision 5, is exempt to the extent provided in chapter 469.
187.8 [EFFECTIVE DATE.] This section is effective the day
187.9 following final enactment.
187.10 Sec. 11. Minnesota Statutes 2002, section 273.124,
187.11 subdivision 8, is amended to read:
187.12 Subd. 8. [HOMESTEAD OWNED BY OR LEASED TO FAMILY FARM
187.13 CORPORATION, JOINT FARM VENTURE, LIMITED LIABILITY COMPANY, OR
187.14 PARTNERSHIP.] (a) Each family farm corporation, each; each joint
187.15 family farm venture,; and each limited liability company, and
187.16 each or partnership operating which operates a family farm; is
187.17 entitled to class 1b under section 273.13, subdivision 22,
187.18 paragraph (b), or class 2a assessment for one homestead occupied
187.19 by a shareholder, member, or partner thereof who is residing on
187.20 the land, and actively engaged in farming of the land owned by
187.21 the family farm corporation, joint family farm venture, limited
187.22 liability company, or partnership operating a family farm.
187.23 Homestead treatment applies even if legal title to the property
187.24 is in the name of the family farm corporation, joint family farm
187.25 venture, limited liability company, or partnership operating the
187.26 family farm, and not in the name of the person residing on it.
187.27 "Family farm corporation," "family farm," and "partnership
187.28 operating a family farm" have the meanings given in section
187.29 500.24, except that the number of allowable shareholders,
187.30 members, or partners under this subdivision shall not exceed
187.31 12. "Limited liability company" has the meaning contained in
187.32 sections 322B.03, subdivision 28, and 500.24, subdivision 2,
187.33 paragraphs (l) and (m). "Joint family farm venture" means a
187.34 cooperative agreement among two or more farm enterprises
187.35 authorized to operate a family farm under section 500.24.
187.36 (b) In addition to property specified in paragraph (a), any
188.1 other residences owned by family farm corporations, joint family
188.2 farm ventures, limited liability companies, or partnerships
188.3 operating a family farm described in paragraph (a) which are
188.4 located on agricultural land and occupied as homesteads by its
188.5 shareholders, members, or partners who are actively engaged in
188.6 farming on behalf of that corporation, joint farm venture,
188.7 limited liability company, or partnership must also be assessed
188.8 as class 2a property or as class 1b property under section
188.9 273.13.
188.10 (c) Agricultural property that is owned by a member,
188.11 partner, or shareholder of a family farm corporation or joint
188.12 family farm venture, limited liability company operating a
188.13 family farm, or by a partnership operating a family farm and
188.14 leased to the family farm corporation, limited liability
188.15 company, or partnership operating a family farm, or joint farm
188.16 venture, as defined in paragraph (a), is eligible for
188.17 classification as class 1b or class 2a under section 273.13, if
188.18 the owner is actually residing on the property, and is actually
188.19 engaged in farming the land on behalf of that corporation, joint
188.20 farm venture, limited liability company, or partnership. This
188.21 paragraph applies without regard to any legal possession rights
188.22 of the family farm corporation, joint family farm venture,
188.23 limited liability company, or partnership operating a family
188.24 farm under the lease.
188.25 [EFFECTIVE DATE.] This section is effective the day
188.26 following final enactment.
188.27 Sec. 12. Minnesota Statutes 2002, section 273.19,
188.28 subdivision 1a, is amended to read:
188.29 Subd. 1a. For purposes of this section, a lease includes
188.30 any agreement, except a cooperative farming agreement pursuant
188.31 to section 97A.135, subdivision 3, or a lease executed pursuant
188.32 to section 272.68, subdivision 4, permitting a nonexempt person
188.33 or entity to use the property, regardless of whether the
188.34 agreement is characterized as a lease. A lease has a "term of
188.35 at least one year" if the term is for a period of less than one
188.36 year and the lease permits the parties to renew the lease
189.1 without requiring that similar terms for leasing the property
189.2 will be offered to other applicants or bidders through a
189.3 competitive bidding or other form of offer to potential lessees
189.4 or users.
189.5 [EFFECTIVE DATE.] This section is effective the day
189.6 following final enactment.
189.7 Sec. 13. Minnesota Statutes 2002, section 274.14, is
189.8 amended to read:
189.9 274.14 [LENGTH OF SESSION; RECORD.]
189.10 The county board of equalization or the special board of
189.11 equalization appointed by it shall meet during the last ten
189.12 meeting days in June. For this purpose, "meeting days" are
189.13 defined as any day of the week excluding Saturday and Sunday.
189.14 The board may meet on any ten consecutive meeting days in June,
189.15 after the second Friday in June, if. The actual meeting dates
189.16 are must be contained on the valuation notices mailed to each
189.17 property owner in the county under as provided in section
189.18 273.121. For this purpose, "meeting days" is defined as any day
189.19 of the week excluding Saturday and Sunday. No action taken by
189.20 the county board of review after June 30 is valid, except for
189.21 corrections permitted in sections 273.01 and 274.01. The county
189.22 auditor shall keep an accurate record of the proceedings and
189.23 orders of the board. The record must be published like other
189.24 proceedings of county commissioners. A copy of the published
189.25 record must be sent to the commissioner of revenue, with the
189.26 abstract of assessment required by section 274.16.
189.27 [EFFECTIVE DATE.] This section is effective the day
189.28 following final enactment.
189.29 Sec. 14. Minnesota Statutes 2002, section 275.065,
189.30 subdivision 1a, is amended to read:
189.31 Subd. 1a. [OVERLAPPING JURISDICTIONS.] In the case of a
189.32 taxing authority lying in two or more counties, the home county
189.33 auditor shall certify the proposed levy and the proposed local
189.34 tax rate to the other county auditor by September 20 October 5.
189.35 The home county auditor must estimate the levy or rate in
189.36 preparing the notices required in subdivision 3, if the other
190.1 county has not certified the appropriate information. If
190.2 requested by the home county auditor, the other county auditor
190.3 must furnish an estimate to the home county auditor.
190.4 [EFFECTIVE DATE.] This section is effective the day
190.5 following final enactment.
190.6 Sec. 15. Minnesota Statutes 2002, section 275.07,
190.7 subdivision 1, is amended to read:
190.8 Subdivision 1. [CERTIFICATION OF LEVY.] (a) Except as
190.9 provided under paragraph (b), the taxes voted by cities,
190.10 counties, school districts, and special districts shall be
190.11 certified by the proper authorities to the county auditor on or
190.12 before five working days after December 20 in each year. A town
190.13 must certify the levy adopted by the town board to the county
190.14 auditor by September 15 each year. If the town board modifies
190.15 the levy at a special town meeting after September 15, the town
190.16 board must recertify its levy to the county auditor on or before
190.17 five working days after December 20. The taxes certified shall
190.18 not be reduced by the county auditor by the aid received under
190.19 section 273.1398, subdivision 2, but shall be reduced by the
190.20 county auditor by the aid received under section 273.1398,
190.21 subdivision 3. If a city, town, county, school district, or
190.22 special district fails to certify its levy by that date, its
190.23 levy shall be the amount levied by it for the preceding year.
190.24 (b)(i) The taxes voted by counties under sections 103B.241,
190.25 103B.245, and 103B.251 shall be separately certified by the
190.26 county to the county auditor on or before five working days
190.27 after December 20 in each year. The taxes certified shall not
190.28 be reduced by the county auditor by the aid received under
190.29 section 273.1398, subdivisions 2 and 3. If a county fails to
190.30 certify its levy by that date, its levy shall be the amount
190.31 levied by it for the preceding year.
190.32 (ii) For purposes of the proposed property tax notice under
190.33 section 275.065 and the property tax statement under section
190.34 276.04, for the first year in which the county implements the
190.35 provisions of this paragraph, the county auditor shall reduce
190.36 the county's levy for the preceding year to reflect any amount
191.1 levied for water management purposes under clause (i) included
191.2 in the county's levy.
191.3 [EFFECTIVE DATE.] This section is effective the day
191.4 following final enactment.
191.5 Sec. 16. Minnesota Statutes 2002, section 275.07,
191.6 subdivision 4, is amended to read:
191.7 Subd. 4. [REPORT TO COMMISSIONER.] (a) On or before
191.8 October 8 of each year, the county auditor shall report to the
191.9 commissioner of revenue the proposed levy certified by local
191.10 units of government under section 275.065, subdivision 1. If
191.11 any taxing authorities have notified the county auditor that
191.12 they are in the process of negotiating an agreement for sharing,
191.13 merging, or consolidating services but that when the proposed
191.14 levy was certified under section 275.065, subdivision 1c, the
191.15 agreement was not yet finalized, the county auditor shall supply
191.16 that information to the commissioner when filing the report
191.17 under this section and shall recertify the affected levies as
191.18 soon as practical after October 10.
191.19 (b) On or before January 15 of each year, the county
191.20 auditor shall report to the commissioner of revenue the final
191.21 levy certified by local units of government under subdivision 1.
191.22 (c) The levies must be reported in the manner prescribed by
191.23 the commissioner. The reports must show a total levy and the
191.24 amount of each special levy.
191.25 [EFFECTIVE DATE.] This section is effective the day
191.26 following final enactment.
191.27 Sec. 17. Minnesota Statutes 2003 Supplement, section
191.28 276.112, is amended to read:
191.29 276.112 [STATE PROPERTY TAXES; COUNTY TREASURER.]
191.30 On or before January 25 each year, for the period ending
191.31 December 31 of the prior year, and on or before two business
191.32 days before June 29 30 each year, for the period ending on the
191.33 most recent settlement day determined in section 276.09, and on
191.34 or before December 2 each year, for the period ending November
191.35 20, the county treasurer must make full settlement with the
191.36 county auditor according to sections 276.09, 276.10, and 276.111
192.1 for all receipts of state property taxes levied under section
192.2 275.025, and must transmit those receipts to the commissioner of
192.3 revenue by electronic means.
192.4 [EFFECTIVE DATE.] This section is effective the day
192.5 following final enactment.
192.6 Sec. 18. Minnesota Statutes 2002, section 282.016, is
192.7 amended to read:
192.8 282.016 [PROHIBITED PURCHASERS.]
192.9 No (a) A county auditor, county treasurer, county attorney,
192.10 court administrator of the district court, or county assessor
192.11 or, supervisor of assessments, or deputy or clerk or an employee
192.12 of such officer, and no a commissioner for tax-forfeited lands
192.13 or an assistant to such commissioner may, must not become a
192.14 purchaser, either personally or as an agent or attorney for
192.15 another person, of the properties offered for sale under the
192.16 provisions of this chapter, either personally, or as agent or
192.17 attorney for any other person, except that in the county for
192.18 which the person performs duties. A person prohibited from
192.19 purchasing property under this section must not directly or
192.20 indirectly have another person purchase it on behalf of the
192.21 prohibited purchaser for the prohibited purchaser's benefit or
192.22 gain.
192.23 (b) Notwithstanding paragraph (a), such officer, deputy,
192.24 court administrator clerk, or employee or commissioner for
192.25 tax-forfeited lands or assistant to such commissioner may (1)
192.26 purchase lands owned by that official at the time the state
192.27 became the absolute owner thereof or (2) bid upon and purchase
192.28 forfeited property offered for sale under the alternate sale
192.29 procedure described in section 282.01, subdivision 7a.
192.30 [EFFECTIVE DATE.] This section is effective the day
192.31 following final enactment.
192.32 Sec. 19. Minnesota Statutes 2002, section 282.21, is
192.33 amended to read:
192.34 282.21 [FORM OF CONVEYANCE.]
192.35 When any sale has been made under sections 282.14 to
192.36 282.22, upon payment in full of the purchase price, appropriate
193.1 conveyance in fee in such form as may be prescribed by the
193.2 attorney general shall be issued by the commissioner of finance
193.3 to the purchaser or the purchaser's assigns and this conveyance
193.4 shall have the force and effect of a patent from the state.
193.5 [EFFECTIVE DATE.] This section is effective the day
193.6 following final enactment.
193.7 Sec. 20. Minnesota Statutes 2002, section 282.224, is
193.8 amended to read:
193.9 282.224 [FORM OF CONVEYANCE.]
193.10 When any sale has been made under sections 282.221 to
193.11 282.226, upon payment in full of the purchase price, appropriate
193.12 conveyance in fee, in such form as may be prescribed by the
193.13 attorney general, shall be issued by the commissioner of natural
193.14 resources to the purchaser or the purchaser's assignee, and the
193.15 conveyance shall have the force and effect of a patent from the
193.16 state.
193.17 [EFFECTIVE DATE.] This section is effective the day
193.18 following final enactment.
193.19 Sec. 21. Minnesota Statutes 2002, section 282.301, is
193.20 amended to read:
193.21 282.301 [RECEIPTS FOR PAYMENTS.]
193.22 When any sale has been made under sections 282.012 and
193.23 282.241 to 282.324, the purchaser shall receive from the county
193.24 auditor at the time of repurchase a receipt, in such form as may
193.25 be prescribed by the attorney general. When the purchase price
193.26 of a parcel of land shall be paid in full, the following facts
193.27 shall be certified by the county auditor to the commissioner of
193.28 revenue of the state of Minnesota: the description of land, the
193.29 date of sale, the name of the purchaser or the purchaser's
193.30 assignee, and the date when the final installment of the
193.31 purchase price was paid. Upon payment in full of the purchase
193.32 price, the purchaser or the assignee shall receive a quitclaim
193.33 deed from the state, to be executed by the commissioner of
193.34 revenue. The deed must be sent to the county auditor who shall
193.35 have it recorded before it is forwarded to the purchaser.
193.36 Failure to make any payment herein required shall constitute
194.1 default and upon such default and cancellation in accord with
194.2 section 282.40, the right, title and interest of the purchaser
194.3 or the purchaser's heirs, representatives, or assigns in such
194.4 parcel shall terminate.
194.5 [EFFECTIVE DATE.] This section is effective the day
194.6 following final enactment.
194.7 Sec. 22. [473.24] [POPULATION ESTIMATES.]
194.8 (a) The Metropolitan Council shall prepare an estimate of
194.9 population and of the number of households for each city and
194.10 town in the metropolitan area annually and convey the estimates
194.11 to the governing body of each city or town by June 1 each year.
194.12 In the case of a city or town that is located partly within and
194.13 partly without the metropolitan area, the Metropolitan Council
194.14 shall estimate the proportion of the total population and number
194.15 of households that reside within the area. The Metropolitan
194.16 Council may prepare an estimate of the population and of the
194.17 number of households for any other political subdivision located
194.18 in the metropolitan area.
194.19 (b) A governing body may challenge an estimate made under
194.20 this section by filing its specific objections in writing with
194.21 the Metropolitan Council by June 24. If the challenge does not
194.22 result in an acceptable estimate, the governing body may have a
194.23 special census conducted by the United States Bureau of the
194.24 Census. The political subdivision must notify the Metropolitan
194.25 Council on or before July 1 of its intent to have the special
194.26 census conducted. The political subdivision must bear all costs
194.27 of the special census. Results of the special census must be
194.28 received by the Metropolitan Council by the next April 15 to be
194.29 used in that year's June 1 estimate under this section. The
194.30 Metropolitan Council shall certify the estimates of population
194.31 and number of households to the state demographer and to the
194.32 commissioner of revenue by July 15 each year, including any
194.33 estimates still under objection.
194.34 (c) No changes in population or household estimates after
194.35 July 15 in an aid calculation year shall be considered in
194.36 determining aids under sections 477A.011 to 477A.014. Clerical
195.1 errors in certification or use of the estimates and counts
195.2 established as of July 15 in the aid calculation year are
195.3 subject to correction under section 477A.014.
195.4 [EFFECTIVE DATE.] This section is effective the day
195.5 following final enactment.
195.6 Sec. 23. Minnesota Statutes 2002, section 473F.02,
195.7 subdivision 7, is amended to read:
195.8 Subd. 7. [POPULATION.] "Population" means the most recent
195.9 estimate of the population of a municipality made by the
195.10 Metropolitan Council under section 473.24 and filed with the
195.11 commissioner of revenue as of July 1 15 of the year in which a
195.12 municipality's distribution net tax capacity is calculated. The
195.13 council shall annually estimate the population of each
195.14 municipality as of a date which it determines and, in the case
195.15 of a municipality which is located partly within and partly
195.16 without the area, the proportion of the total which resides
195.17 within the area, and shall promptly thereafter file its
195.18 estimates with the commissioner of revenue.
195.19 [EFFECTIVE DATE.] This section is effective the day
195.20 following final enactment.
195.21 Sec. 24. Minnesota Statutes 2003 Supplement, section
195.22 477A.011, subdivision 36, is amended to read:
195.23 Subd. 36. [CITY AID BASE.] (a) Except as otherwise
195.24 provided in this subdivision, "city aid base" is zero.
195.25 (b) The city aid base for any city with a population less
195.26 than 500 is increased by $40,000 for aids payable in calendar
195.27 year 1995 and thereafter, and the maximum amount of total aid it
195.28 may receive under section 477A.013, subdivision 9, paragraph
195.29 (c), is also increased by $40,000 for aids payable in calendar
195.30 year 1995 only, provided that:
195.31 (i) the average total tax capacity rate for taxes payable
195.32 in 1995 exceeds 200 percent;
195.33 (ii) the city portion of the tax capacity rate exceeds 100
195.34 percent; and
195.35 (iii) its city aid base is less than $60 per capita.
195.36 (c) The city aid base for a city is increased by $20,000 in
196.1 1998 and thereafter and the maximum amount of total aid it may
196.2 receive under section 477A.013, subdivision 9, paragraph (c), is
196.3 also increased by $20,000 in calendar year 1998 only, provided
196.4 that:
196.5 (i) the city has a population in 1994 of 2,500 or more;
196.6 (ii) the city is located in a county, outside of the
196.7 metropolitan area, which contains a city of the first class;
196.8 (iii) the city's net tax capacity used in calculating its
196.9 1996 aid under section 477A.013 is less than $400 per capita;
196.10 and
196.11 (iv) at least four percent of the total net tax capacity,
196.12 for taxes payable in 1996, of property located in the city is
196.13 classified as railroad property.
196.14 (d) The city aid base for a city is increased by $200,000
196.15 in 1999 and thereafter and the maximum amount of total aid it
196.16 may receive under section 477A.013, subdivision 9, paragraph
196.17 (c), is also increased by $200,000 in calendar year 1999 only,
196.18 provided that:
196.19 (i) the city was incorporated as a statutory city after
196.20 December 1, 1993;
196.21 (ii) its city aid base does not exceed $5,600; and
196.22 (iii) the city had a population in 1996 of 5,000 or more.
196.23 (e) The city aid base for a city is increased by $450,000
196.24 in 1999 to 2008 and the maximum amount of total aid it may
196.25 receive under section 477A.013, subdivision 9, paragraph (c), is
196.26 also increased by $450,000 in calendar year 1999 only, provided
196.27 that:
196.28 (i) the city had a population in 1996 of at least 50,000;
196.29 (ii) its population had increased by at least 40 percent in
196.30 the ten-year period ending in 1996; and
196.31 (iii) its city's net tax capacity for aids payable in 1998
196.32 is less than $700 per capita.
196.33 (f) Beginning in 2004, the city aid base for a city is
196.34 equal to the sum of its city aid base in 2003 and the amount of
196.35 additional aid it was certified to receive under section 477A.06
196.36 in 2003. For 2004 only, the maximum amount of total aid a city
197.1 may receive under section 477A.013, subdivision 9, paragraph
197.2 (c), is also increased by the amount it was certified to receive
197.3 under section 477A.06 in 2003.
197.4 (g) The city aid base for a city is increased by $150,000
197.5 for aids payable in 2000 and thereafter, and the maximum amount
197.6 of total aid it may receive under section 477A.013, subdivision
197.7 9, paragraph (c), is also increased by $150,000 in calendar year
197.8 2000 only, provided that:
197.9 (1) the city has a population that is greater than 1,000
197.10 and less than 2,500;
197.11 (2) its commercial and industrial percentage for aids
197.12 payable in 1999 is greater than 45 percent; and
197.13 (3) the total market value of all commercial and industrial
197.14 property in the city for assessment year 1999 is at least 15
197.15 percent less than the total market value of all commercial and
197.16 industrial property in the city for assessment year 1998.
197.17 (h) (g) The city aid base for a city is increased by
197.18 $200,000 in 2000 and thereafter, and the maximum amount of total
197.19 aid it may receive under section 477A.013, subdivision 9,
197.20 paragraph (c), is also increased by $200,000 in calendar year
197.21 2000 only, provided that:
197.22 (1) the city had a population in 1997 of 2,500 or more;
197.23 (2) the net tax capacity of the city used in calculating
197.24 its 1999 aid under section 477A.013 is less than $650 per
197.25 capita;
197.26 (3) the pre-1940 housing percentage of the city used in
197.27 calculating 1999 aid under section 477A.013 is greater than 12
197.28 percent;
197.29 (4) the 1999 local government aid of the city under section
197.30 477A.013 is less than 20 percent of the amount that the formula
197.31 aid of the city would have been if the need increase percentage
197.32 was 100 percent; and
197.33 (5) the city aid base of the city used in calculating aid
197.34 under section 477A.013 is less than $7 per capita.
197.35 (i) (h) The city aid base for a city is increased by
197.36 $102,000 in 2000 and thereafter, and the maximum amount of total
198.1 aid it may receive under section 477A.013, subdivision 9,
198.2 paragraph (c), is also increased by $102,000 in calendar year
198.3 2000 only, provided that:
198.4 (1) the city has a population in 1997 of 2,000 or more;
198.5 (2) the net tax capacity of the city used in calculating
198.6 its 1999 aid under section 477A.013 is less than $455 per
198.7 capita;
198.8 (3) the net levy of the city used in calculating 1999 aid
198.9 under section 477A.013 is greater than $195 per capita; and
198.10 (4) the 1999 local government aid of the city under section
198.11 477A.013 is less than 38 percent of the amount that the formula
198.12 aid of the city would have been if the need increase percentage
198.13 was 100 percent.
198.14 (j) (i) The city aid base for a city is increased by
198.15 $32,000 in 2001 and thereafter, and the maximum amount of total
198.16 aid it may receive under section 477A.013, subdivision 9,
198.17 paragraph (c), is also increased by $32,000 in calendar year
198.18 2001 only, provided that:
198.19 (1) the city has a population in 1998 that is greater than
198.20 200 but less than 500;
198.21 (2) the city's revenue need used in calculating aids
198.22 payable in 2000 was greater than $200 per capita;
198.23 (3) the city net tax capacity for the city used in
198.24 calculating aids available in 2000 was equal to or less than
198.25 $200 per capita;
198.26 (4) the city aid base of the city used in calculating aid
198.27 under section 477A.013 is less than $65 per capita; and
198.28 (5) the city's formula aid for aids payable in 2000 was
198.29 greater than zero.
198.30 (k) (j) The city aid base for a city is increased by $7,200
198.31 in 2001 and thereafter, and the maximum amount of total aid it
198.32 may receive under section 477A.013, subdivision 9, paragraph
198.33 (c), is also increased by $7,200 in calendar year 2001 only,
198.34 provided that:
198.35 (1) the city had a population in 1998 that is greater than
198.36 200 but less than 500;
199.1 (2) the city's commercial industrial percentage used in
199.2 calculating aids payable in 2000 was less than ten percent;
199.3 (3) more than 25 percent of the city's population was 60
199.4 years old or older according to the 1990 census;
199.5 (4) the city aid base of the city used in calculating aid
199.6 under section 477A.013 is less than $15 per capita; and
199.7 (5) the city's formula aid for aids payable in 2000 was
199.8 greater than zero.
199.9 (l) (k) The city aid base for a city is increased by
199.10 $45,000 in 2001 and thereafter and by an additional $50,000 in
199.11 calendar years 2002 to 2011, and the maximum amount of total aid
199.12 it may receive under section 477A.013, subdivision 9, paragraph
199.13 (c), is also increased by $45,000 in calendar year 2001 only,
199.14 and by $50,000 in calendar year 2002 only, provided that:
199.15 (1) the net tax capacity of the city used in calculating
199.16 its 2000 aid under section 477A.013 is less than $810 per
199.17 capita;
199.18 (2) the population of the city declined more than two
199.19 percent between 1988 and 1998;
199.20 (3) the net levy of the city used in calculating 2000 aid
199.21 under section 477A.013 is greater than $240 per capita; and
199.22 (4) the city received less than $36 per capita in aid under
199.23 section 477A.013, subdivision 9, for aids payable in 2000.
199.24 (m) (l) The city aid base for a city with a population of
199.25 10,000 or more which is located outside of the seven-county
199.26 metropolitan area is increased in 2002 and thereafter, and the
199.27 maximum amount of total aid it may receive under section
199.28 477A.013, subdivision 9, paragraph (b) or (c), is also increased
199.29 in calendar year 2002 only, by an amount equal to the lesser of:
199.30 (1)(i) the total population of the city, as determined by
199.31 the United States Bureau of the Census, in the 2000 census, (ii)
199.32 minus 5,000, (iii) times 60; or
199.33 (2) $2,500,000.
199.34 (n) (m) The city aid base is increased by $50,000 in 2002
199.35 and thereafter, and the maximum amount of total aid it may
199.36 receive under section 477A.013, subdivision 9, paragraph (c), is
200.1 also increased by $50,000 in calendar year 2002 only, provided
200.2 that:
200.3 (1) the city is located in the seven-county metropolitan
200.4 area;
200.5 (2) its population in 2000 is between 10,000 and 20,000;
200.6 and
200.7 (3) its commercial industrial percentage, as calculated for
200.8 city aid payable in 2001, was greater than 25 percent.
200.9 (o) (n) The city aid base for a city is increased by
200.10 $150,000 in calendar years 2002 to 2011 and the maximum amount
200.11 of total aid it may receive under section 477A.013, subdivision
200.12 9, paragraph (c), is also increased by $150,000 in calendar year
200.13 2002 only, provided that:
200.14 (1) the city had a population of at least 3,000 but no more
200.15 than 4,000 in 1999;
200.16 (2) its home county is located within the seven-county
200.17 metropolitan area;
200.18 (3) its pre-1940 housing percentage is less than 15
200.19 percent; and
200.20 (4) its city net tax capacity per capita for taxes payable
200.21 in 2000 is less than $900 per capita.
200.22 (p) (o) The city aid base for a city is increased by
200.23 $200,000 beginning in calendar year 2003 and the maximum amount
200.24 of total aid it may receive under section 477A.013, subdivision
200.25 9, paragraph (c), is also increased by $200,000 in calendar year
200.26 2003 only, provided that the city qualified for an increase in
200.27 homestead and agricultural credit aid under Laws 1995, chapter
200.28 264, article 8, section 18.
200.29 (q) (p) The city aid base for a city is increased by
200.30 $200,000 in 2004 only and the maximum amount of total aid it may
200.31 receive under section 477A.013, subdivision 9, is also increased
200.32 by $200,000 in calendar year 2004 only, if the city is the site
200.33 of a nuclear dry cask storage facility.
200.34 (r) (q) The city aid base for a city is increased by
200.35 $10,000 in 2004 and thereafter and the maximum total aid it may
200.36 receive under section 477A.013, subdivision 9, is also increased
201.1 by $10,000 in calendar year 2004 only, if the city was included
201.2 in a federal major disaster designation issued on April 1, 1998,
201.3 and its pre-1940 housing stock was decreased by more than 40
201.4 percent between 1990 and 2000.
201.5 [EFFECTIVE DATE.] This section is effective beginning with
201.6 aids payable in 2004.
201.7 Sec. 25. Minnesota Statutes 2003 Supplement, section
201.8 477A.03, subdivision 2b, is amended to read:
201.9 Subd. 2b. [COUNTIES.] (a) For aids payable in calendar
201.10 year 2005 and thereafter, the total aids paid to counties under
201.11 section 477A.0124, subdivision 3, are limited to $100,500,000.
201.12 Each calendar year, $500,000 shall be retained by the
201.13 commissioner of revenue to make reimbursements to the
201.14 commissioner of finance for payments made under section 611.27.
201.15 For calendar year 2004, the amount shall be $500,000 is
201.16 appropriated from the general fund for this purpose in addition
201.17 to the payments authorized under section 477A.0124, subdivision
201.18 1. For calendar year 2005 and subsequent years, the amount
201.19 shall be deducted from the appropriation under this paragraph
201.20 for section 477A.0124, subdivision 1. The reimbursements shall
201.21 be to defray the additional costs associated with court-ordered
201.22 counsel under section 611.27. Any retained amounts not used for
201.23 reimbursement in a year shall be included in the next
201.24 distribution of county need aid that is certified to the county
201.25 auditors for the purpose of property tax reduction for the next
201.26 taxes payable year.
201.27 (b) For aids payable in 2005 and thereafter, the total aids
201.28 under section 477A.0124, subdivision 4, are limited to
201.29 $105,000,000. The commissioner of finance shall bill the
201.30 commissioner of revenue for the cost of preparation of local
201.31 impact notes as required by section 3.987, not to exceed
201.32 $207,000 in fiscal year 2004 and thereafter. The commissioner
201.33 of education shall bill the commissioner of revenue for the cost
201.34 of preparation of local impact notes for school districts as
201.35 required by section 3.987, not to exceed $7,000 in fiscal year
201.36 2004 and thereafter. For aids payable in 2004, $214,000 is
202.1 appropriated from the general fund for this purpose. For aids
202.2 payable in 2005 and thereafter, the commissioner of revenue
202.3 shall deduct the amounts billed under this paragraph from the
202.4 appropriation under this paragraph section for section
202.5 477A.0124, subdivision 4. The amounts deducted are appropriated
202.6 to the commissioner of finance and the commissioner of education
202.7 for the preparation of local impact notes.
202.8 [EFFECTIVE DATE.] This section is effective for aids
202.9 payable in 2004 and thereafter.
202.10 Sec. 26. Laws 2003, First Special Session chapter 21,
202.11 article 5, section 13, is amended to read:
202.12 Sec. 13. [2004 CITY AID REDUCTIONS.]
202.13 The commissioner of revenue shall compute an aid reduction
202.14 amount for 2004 for each city as provided in this section.
202.15 The initial aid reduction amount for each city is the
202.16 amount by which the city's aid distribution under Minnesota
202.17 Statutes, section 477A.013, and related provisions payable in
202.18 2003 exceeds the city's 2004 distribution under those provisions.
202.19 The minimum aid reduction amount for a city is the amount
202.20 of its reduction in 2003 under section 12. If a city receives
202.21 an increase to its city aid base under Minnesota Statutes,
202.22 section 477A.011, subdivision 36, its minimum aid reduction is
202.23 reduced by an equal amount.
202.24 The maximum aid reduction amount for a city is an amount
202.25 equal to 14 percent of the city's total 2004 levy plus aid
202.26 revenue base, except that if the city has a city net tax
202.27 capacity for aids payable in 2004, as defined in Minnesota
202.28 Statutes, section 477A.011, subdivision 20, of $700 per capita
202.29 or less, the maximum aid reduction shall not exceed an amount
202.30 equal to 13 percent of the city's total 2004 levy plus aid
202.31 revenue base.
202.32 If the initial aid reduction amount for a city is less than
202.33 the minimum aid reduction amount for that city, the final aid
202.34 reduction amount for the city is the sum of the initial aid
202.35 reduction amount and the lesser of the amount of the city's
202.36 payable 2004 reimbursement under Minnesota Statutes, section
203.1 273.1384, or the difference between the minimum and initial aid
203.2 reduction amounts for the city, and the amount of the final aid
203.3 reduction in excess of the initial aid reduction is deducted
203.4 from the city's reimbursements pursuant to Minnesota Statutes,
203.5 section 273.1384.
203.6 If the initial aid reduction amount for a city is greater
203.7 than the maximum aid reduction amount for the city, the city
203.8 receives an additional distribution under this section equal to
203.9 the result of subtracting the maximum aid reduction amount from
203.10 the initial aid reduction amount. This distribution shall be
203.11 paid in equal installments in 2004 on the dates specified in
203.12 Minnesota Statutes, section 477A.015. The amount necessary for
203.13 these additional distributions is appropriated to the
203.14 commissioner of revenue from the general fund in fiscal year
203.15 2005.
203.16 The initial aid reduction is applied to the city's
203.17 distribution pursuant to Minnesota Statutes, section 477A.013,
203.18 and any aid reduction in excess of the initial aid reduction is
203.19 applied to the city's reimbursements pursuant to Minnesota
203.20 Statutes, section 273.1384.
203.21 To the extent that sufficient information is available on
203.22 each payment date in 2004, the commissioner of revenue shall pay
203.23 the reimbursements reduced under this section in equal
203.24 installments on the payment dates provided in law.
203.25 [EFFECTIVE DATE.] This section is effective for aids
203.26 payable in 2004.
203.27 Sec. 27. Laws 2003, First Special Session chapter 21,
203.28 article 6, section 9, is amended to read:
203.29 Sec. 9. [DEFINITIONS.]
203.30 (a) For purposes of sections 9 to 15, the following terms
203.31 have the meanings given them in this section.
203.32 (b) The 2003 and 2004 "levy plus aid revenue base" for a
203.33 county is the sum of that county's certified property tax levy
203.34 for taxes payable in 2003, plus the sum of the amounts the
203.35 county was certified to receive in the designated calendar year
203.36 as:
204.1 (1) homestead and agricultural credit aid under Minnesota
204.2 Statutes, section 273.1398, subdivision 2, plus any additional
204.3 aid under section 16, minus the amount calculated under section
204.4 273.1398, subdivision 4a, paragraph (b), for counties in
204.5 judicial districts one, three, six, and ten, and 25 percent of
204.6 the amount calculated under section 273.1398, subdivision 4a,
204.7 paragraph (b), for counties in judicial districts two and four;
204.8 (2) the amount of county manufactured home homestead and
204.9 agricultural credit aid computed for the county for payment in
204.10 2003 under section 273.166;
204.11 (3) criminal justice aid under Minnesota Statutes, section
204.12 477A.0121;
204.13 (4) family preservation aid under Minnesota Statutes,
204.14 section 477A.0122;
204.15 (5) taconite aids under Minnesota Statutes, sections 298.28
204.16 and 298.282, including any aid which was required to be placed
204.17 in a special fund for expenditure in the next succeeding year;
204.18 and
204.19 (6) county program aid under section 477A.0124, exclusive
204.20 of the attached machinery aid component.
204.21 [EFFECTIVE DATE.] This section is effective for aids
204.22 payable in 2004.
204.23 Sec. 28. [REPEALER.]
204.24 Minnesota Statutes 2002, sections 273.19, subdivision 5;
204.25 274.05; 275.15; and 283.07, are repealed effective the day
204.26 following final enactment.
204.27 ARTICLE 11
204.28 SALES AND USE TAXES TECHNICAL
204.29 Section 1. Minnesota Statutes 2002, section 289A.38,
204.30 subdivision 6, is amended to read:
204.31 Subd. 6. [OMISSION IN EXCESS OF 25 PERCENT.] Additional
204.32 taxes may be assessed within 6-1/2 years after the due date of
204.33 the return or the date the return was filed, whichever is later,
204.34 if:
204.35 (1) the taxpayer omits from gross income an amount properly
204.36 includable in it that is in excess of 25 percent of the amount
205.1 of gross income stated in the return;
205.2 (2) the taxpayer omits from a sales, use, or withholding
205.3 tax return an amount of taxes in excess of 25 percent of the
205.4 taxes reported in the return; or
205.5 (3) the taxpayer omits from the gross estate assets in
205.6 excess of 25 percent of the gross estate reported in the return.
205.7 [EFFECTIVE DATE.] This section is effective the day
205.8 following final enactment.
205.9 Sec. 2. Minnesota Statutes 2003 Supplement, section
205.10 289A.40, subdivision 2, is amended to read:
205.11 Subd. 2. [BAD DEBT LOSS.] If a claim relates to an
205.12 overpayment because of a failure to deduct a loss due to a bad
205.13 debt or to a security becoming worthless, the claim is
205.14 considered timely if filed within seven years from the date
205.15 prescribed for the filing of the return. A claim relating to an
205.16 overpayment of taxes under chapter 297A must be filed within
205.17 3-1/2 years from the date prescribed for filing the return, plus
205.18 any extensions granted for filing the return, but only if filed
205.19 within the extended time. The refund or credit is limited to
205.20 the amount of overpayment attributable to the loss. "Bad debt"
205.21 for purposes of this subdivision, has the same meaning as that
205.22 term is used in United States Code, title 26, section 166,
205.23 except that for a claim relating to an overpayment of taxes
205.24 under chapter 297A the following are excluded from the
205.25 calculation of bad debt: financing charges or interest; sales
205.26 or use taxes charged on the purchase price; uncollectible
205.27 amounts on property that remain in the possession of the seller
205.28 until the full purchase price is paid; expenses incurred in
205.29 attempting to collect any debt; and repossessed property.
205.30 [EFFECTIVE DATE.] For claims relating to an overpayment of
205.31 taxes under chapter 297A, this section is effective for sales
205.32 and purchases made on or after January 1, 2004; for all other
205.33 bad debts or claims, this section is effective on or after July
205.34 1, 2003.
205.35 Sec. 3. Minnesota Statutes 2003 Supplement, section
205.36 297A.668, subdivision 1, is amended to read:
206.1 Subdivision 1. [ APPLICABILITY.] The provisions of this
206.2 section apply regardless of the characterization of a product as
206.3 tangible personal property, a digital good, or a service; but do
206.4 not apply to telecommunications services, or the sales of motor
206.5 vehicles, watercraft, aircraft, modular homes, manufactured
206.6 homes, or mobile homes. These provisions only apply to
206.7 determine a seller's obligation to pay or collect and remit a
206.8 sales or use tax with respect to the seller's sale of a
206.9 product. These provisions do not affect the obligation of a
206.10 seller as purchaser to remit tax on the use of the product.
206.11 [EFFECTIVE DATE.] This section is effective the day
206.12 following final enactment.
206.13 Sec. 4. Minnesota Statutes 2003 Supplement, section
206.14 297A.668, subdivision 3, is amended to read:
206.15 Subd. 3. [LEASE OR RENTAL OF TANGIBLE PERSONAL PROPERTY.]
206.16 The lease or rental of tangible personal property, other than
206.17 property identified in subdivision 4 or 5, shall be sourced as
206.18 required in paragraphs (a) to (c).
206.19 (a) For a lease or rental that requires recurring periodic
206.20 payments, the first periodic payment is sourced the same as a
206.21 retail sale in accordance with the provisions of subdivision 6 2.
206.22 Periodic payments made subsequent to the first payment are
206.23 sourced to the primary property location for each period covered
206.24 by the payment. The primary property location must be as
206.25 indicated by an address for the property provided by the lessee
206.26 that is available to the lessor from its records maintained in
206.27 the ordinary course of business, when use of this address does
206.28 not constitute bad faith. The property location must not be
206.29 altered by intermittent use at different locations, such as use
206.30 of business property that accompanies employees on business
206.31 trips and service calls.
206.32 (b) For a lease or rental that does not require recurring
206.33 periodic payments, the payment is sourced the same as a retail
206.34 sale in accordance with the provisions of subdivision 2.
206.35 (c) This subdivision does not affect the imposition or
206.36 computation of sales or use tax on leases or rentals based on a
207.1 lump sum or accelerated basis, or on the acquisition of property
207.2 for lease.
207.3 [EFFECTIVE DATE.] This section is effective for sales and
207.4 purchases made on or after January 1, 2004.
207.5 Sec. 5. Minnesota Statutes 2003 Supplement, section
207.6 297A.668, subdivision 5, is amended to read:
207.7 Subd. 5. [TRANSPORTATION EQUIPMENT.] (a) The retail sale,
207.8 including lease or rental, of transportation equipment shall be
207.9 sourced the same as a retail sale in accordance with the
207.10 provisions of subdivision 2, notwithstanding the exclusion of
207.11 lease or rental in subdivision 2.
207.12 (b) "Transportation equipment" means any of the following:
207.13 (1) locomotives and railcars that are utilized for the
207.14 carriage of persons or property in interstate commerce; and/or
207.15 (2) trucks and truck-tractors with a gross vehicle weight
207.16 rating (GVWR) of 10,001 pounds or greater, trailers,
207.17 semitrailers, or passenger buses that are:
207.18 (i) registered through the international registration plan;
207.19 and
207.20 (ii) operated under authority of a carrier authorized and
207.21 certified by the United States Department of Transportation or
207.22 another federal authority to engage in the carriage of persons
207.23 or property in interstate commerce;
207.24 (3) aircraft that are operated by air carriers authorized
207.25 and certificated by the United States Department of
207.26 Transportation or another federal or a foreign authority to
207.27 engage in the carriage of persons or property in interstate
207.28 commerce; or
207.29 (4) containers designed for use on and component parts
207.30 attached or secured on the transportation equipment described in
207.31 items (1) through (3).
207.32 [EFFECTIVE DATE.] This section is effective for sales and
207.33 purchases made on or after January 1, 2004.
207.34 Sec. 6. Minnesota Statutes 2003 Supplement, section
207.35 297A.669, subdivision 16, is amended to read:
207.36 Subd. 16. [SERVICE ADDRESS.] "Service address," for
208.1 purposes of this section, means:
208.2 (1) the location of the telecommunications equipment to
208.3 which a customer's call is charged and from which the call
208.4 originates or terminates, regardless of where the call is billed
208.5 or paid;
208.6 (2) if the location in paragraph (a) (1) is not known,
208.7 service address means the origination point of the signal of the
208.8 telecommunications services first identified by either the
208.9 seller's telecommunications system or in information received by
208.10 the seller from its service provider, where the system used to
208.11 transport the signals is not that of the seller; or
208.12 (3) if the location in paragraphs (a) (1) and (b) (2) is
208.13 not known, the service address means the location of the
208.14 customer's place of primary use.
208.15 [EFFECTIVE DATE.] This section is effective for sales and
208.16 purchases made on or after January 1, 2004.
208.17 Sec. 7. Minnesota Statutes 2003 Supplement, section
208.18 297A.68, subdivision 2, is amended to read:
208.19 Subd. 2. [MATERIALS CONSUMED IN INDUSTRIAL PRODUCTION.]
208.20 (a) Materials stored, used, or consumed in industrial production
208.21 of personal property intended to be sold ultimately at retail
208.22 are exempt, whether or not the item so used becomes an
208.23 ingredient or constituent part of the property produced.
208.24 Materials that qualify for this exemption include, but are not
208.25 limited to, the following:
208.26 (1) chemicals, including chemicals used for cleaning food
208.27 processing machinery and equipment;
208.28 (2) materials, including chemicals, fuels, and electricity
208.29 purchased by persons engaged in industrial production to treat
208.30 waste generated as a result of the production process;
208.31 (3) fuels, electricity, gas, and steam used or consumed in
208.32 the production process, except that electricity, gas, or steam
208.33 used for space heating, cooling, or lighting is exempt if (i) it
208.34 is in excess of the average climate control or lighting for the
208.35 production area, and (ii) it is necessary to produce that
208.36 particular product;
209.1 (4) petroleum products and lubricants;
209.2 (5) packaging materials, including returnable containers
209.3 used in packaging food and beverage products;
209.4 (6) accessory tools, equipment, and other items that are
209.5 separate detachable units with an ordinary useful life of less
209.6 than 12 months used in producing a direct effect upon the
209.7 product; and
209.8 (7) the following materials, tools, and equipment used in
209.9 metalcasting: crucibles, thermocouple protection sheaths and
209.10 tubes, stalk tubes, refractory materials, molten metal filters
209.11 and filter boxes, degassing lances, and base blocks.
209.12 (b) This exemption does not include:
209.13 (1) machinery, equipment, implements, tools, accessories,
209.14 appliances, contrivances and furniture and fixtures, except
209.15 those listed in paragraph (a), clause (6); and
209.16 (2) petroleum and special fuels used in producing or
209.17 generating power for propelling ready-mixed concrete trucks on
209.18 the public highways of this state.
209.19 (c) Industrial production includes, but is not limited to,
209.20 research, development, design or production of any tangible
209.21 personal property, manufacturing, processing (other than by
209.22 restaurants and consumers) of agricultural products (whether
209.23 vegetable or animal), commercial fishing, refining, smelting,
209.24 reducing, brewing, distilling, printing, mining, quarrying,
209.25 lumbering, generating electricity, the production of road
209.26 building materials, and the research, development, design, or
209.27 production of computer software. Industrial production does not
209.28 include painting, cleaning, repairing or similar processing of
209.29 property except as part of the original manufacturing process.
209.30 Industrial production does not include the furnishing of
209.31 services listed in section 297A.61, subdivision 3, paragraph
209.32 (g), clause (6), items (i) to (vi) and (viii).
209.33 [EFFECTIVE DATE.] This section is effective the day
209.34 following final enactment.
209.35 Sec. 8. Minnesota Statutes 2003 Supplement, section
209.36 297A.68, subdivision 5, is amended to read:
210.1 Subd. 5. [CAPITAL EQUIPMENT.] (a) Capital equipment is
210.2 exempt. The tax must be imposed and collected as if the rate
210.3 under section 297A.62, subdivision 1, applied, and then refunded
210.4 in the manner provided in section 297A.75.
210.5 "Capital equipment" means machinery and equipment purchased
210.6 or leased, and used in this state by the purchaser or lessee
210.7 primarily for manufacturing, fabricating, mining, or refining
210.8 tangible personal property to be sold ultimately at retail if
210.9 the machinery and equipment are essential to the integrated
210.10 production process of manufacturing, fabricating, mining, or
210.11 refining. Capital equipment also includes machinery and
210.12 equipment used primarily to electronically transmit results
210.13 retrieved by a customer of an on-line computerized data
210.14 retrieval system.
210.15 (b) Capital equipment includes, but is not limited to:
210.16 (1) machinery and equipment used to operate, control, or
210.17 regulate the production equipment;
210.18 (2) machinery and equipment used for research and
210.19 development, design, quality control, and testing activities;
210.20 (3) environmental control devices that are used to maintain
210.21 conditions such as temperature, humidity, light, or air pressure
210.22 when those conditions are essential to and are part of the
210.23 production process;
210.24 (4) materials and supplies used to construct and install
210.25 machinery or equipment;
210.26 (5) repair and replacement parts, including accessories,
210.27 whether purchased as spare parts, repair parts, or as upgrades
210.28 or modifications to machinery or equipment;
210.29 (6) materials used for foundations that support machinery
210.30 or equipment;
210.31 (7) materials used to construct and install special purpose
210.32 buildings used in the production process;
210.33 (8) ready-mixed concrete equipment in which the ready-mixed
210.34 concrete is mixed as part of the delivery process regardless if
210.35 mounted on a chassis and leases of ready-mixed concrete trucks;
210.36 and
211.1 (9) machinery or equipment used for research, development,
211.2 design, or production of computer software.
211.3 (c) Capital equipment does not include the following:
211.4 (1) motor vehicles taxed under chapter 297B;
211.5 (2) machinery or equipment used to receive or store raw
211.6 materials;
211.7 (3) building materials, except for materials included in
211.8 paragraph (b), clauses (6) and (7);
211.9 (4) machinery or equipment used for nonproduction purposes,
211.10 including, but not limited to, the following: plant security,
211.11 fire prevention, first aid, and hospital stations; support
211.12 operations or administration; pollution control; and plant
211.13 cleaning, disposal of scrap and waste, plant communications,
211.14 space heating, cooling, lighting, or safety;
211.15 (5) farm machinery and aquaculture production equipment as
211.16 defined by section 297A.61, subdivisions 12 and 13;
211.17 (6) machinery or equipment purchased and installed by a
211.18 contractor as part of an improvement to real property; or
211.19 (7) machinery and equipment used by restaurants in the
211.20 furnishing, preparing, or serving of prepared foods as defined
211.21 in section 297A.61, subdivision 31;
211.22 (8) machinery and equipment used to furnish the services
211.23 listed in section 297A.61, subdivision 3, paragraph (g), clause
211.24 (6), items (i) to (vi) and (viii); or
211.25 (9) any other item that is not essential to the integrated
211.26 process of manufacturing, fabricating, mining, or refining.
211.27 (d) For purposes of this subdivision:
211.28 (1) "Equipment" means independent devices or tools separate
211.29 from machinery but essential to an integrated production
211.30 process, including computers and computer software, used in
211.31 operating, controlling, or regulating machinery and equipment;
211.32 and any subunit or assembly comprising a component of any
211.33 machinery or accessory or attachment parts of machinery, such as
211.34 tools, dies, jigs, patterns, and molds.
211.35 (2) "Fabricating" means to make, build, create, produce, or
211.36 assemble components or property to work in a new or different
212.1 manner.
212.2 (3) "Integrated production process" means a process or
212.3 series of operations through which tangible personal property is
212.4 manufactured, fabricated, mined, or refined. For purposes of
212.5 this clause, (i) manufacturing begins with the removal of raw
212.6 materials from inventory and ends when the last process prior to
212.7 loading for shipment has been completed; (ii) fabricating begins
212.8 with the removal from storage or inventory of the property to be
212.9 assembled, processed, altered, or modified and ends with the
212.10 creation or production of the new or changed product; (iii)
212.11 mining begins with the removal of overburden from the site of
212.12 the ores, minerals, stone, peat deposit, or surface materials
212.13 and ends when the last process before stockpiling is completed;
212.14 and (iv) refining begins with the removal from inventory or
212.15 storage of a natural resource and ends with the conversion of
212.16 the item to its completed form.
212.17 (4) "Machinery" means mechanical, electronic, or electrical
212.18 devices, including computers and computer software, that are
212.19 purchased or constructed to be used for the activities set forth
212.20 in paragraph (a), beginning with the removal of raw materials
212.21 from inventory through completion of the product, including
212.22 packaging of the product.
212.23 (5) "Machinery and equipment used for pollution control"
212.24 means machinery and equipment used solely to eliminate, prevent,
212.25 or reduce pollution resulting from an activity described in
212.26 paragraph (a).
212.27 (6) "Manufacturing" means an operation or series of
212.28 operations where raw materials are changed in form, composition,
212.29 or condition by machinery and equipment and which results in the
212.30 production of a new article of tangible personal property. For
212.31 purposes of this subdivision, "manufacturing" includes the
212.32 generation of electricity or steam to be sold at retail.
212.33 (7) "Mining" means the extraction of minerals, ores, stone,
212.34 or peat.
212.35 (8) "On-line data retrieval system" means a system whose
212.36 cumulation of information is equally available and accessible to
213.1 all its customers.
213.2 (9) "Primarily" means machinery and equipment used 50
213.3 percent or more of the time in an activity described in
213.4 paragraph (a).
213.5 (10) "Refining" means the process of converting a natural
213.6 resource to an intermediate or finished product, including the
213.7 treatment of water to be sold at retail.
213.8 [EFFECTIVE DATE.] This section is effective the day
213.9 following final enactment.
213.10 Sec. 9. Minnesota Statutes 2003 Supplement, section
213.11 297A.68, subdivision 39, is amended to read:
213.12 Subd. 39. [PREEXISTING BIDS OR CONTRACTS.] (a) The sale of
213.13 tangible personal property or services is exempt from tax or a
213.14 tax rate increase for a period of six months from the effective
213.15 date of the law change that results in the imposition of the tax
213.16 or the tax rate increase under this chapter if:
213.17 (1) the act imposing the tax or increasing the tax rate
213.18 does not have transitional effective date language for existing
213.19 construction contracts and construction bids; and
213.20 (2) the requirements of paragraph (b) are met.
213.21 (b) A sale is tax exempt under paragraph (a) if it meets
213.22 the requirements of either clause (1) or (2):
213.23 (1) For a construction contract:
213.24 (i) the goods or services sold must be used for the
213.25 performance of a bona fide written lump sum or fixed price
213.26 construction contract;
213.27 (ii) the contract must be entered into before the date the
213.28 goods or services become subject to the sales tax or the tax
213.29 rate was increased;
213.30 (iii) the contract must not provide for allocation of
213.31 future taxes; and
213.32 (iv) for each qualifying contract the contractor must give
213.33 the seller documentation of the contract on which an exemption
213.34 is to be claimed.
213.35 (2) For a construction bid:
213.36 (i) the goods or services sold must be used pursuant to an
214.1 obligation of a bid or bids;
214.2 (ii) the bid or bids must be submitted and accepted before
214.3 the date the goods or services became subject to the sales
214.4 tax or the tax rate was increased;
214.5 (iii) the bid or bids must not be able to be withdrawn,
214.6 modified, or changed without forfeiting a bond; and
214.7 (iv) for each qualifying bid, the contractor must give the
214.8 seller documentation of the bid on which an exemption is to be
214.9 claimed.
214.10 [EFFECTIVE DATE.] This section is effective the day
214.11 following final enactment.
214.12 Sec. 10. [REPEALER.]
214.13 Minnesota Rules, parts 8130.0110, subpart 4; 8130.0200,
214.14 subparts 5 and 6; 8130.0400, subpart 9; 8130.1200, subparts 5
214.15 and 6; 8130.2900; 8130.3100, subpart 1; 8130.4000, subparts 1
214.16 and 2; 8130.4200, subpart 1; 8130.4400, subpart 3; 8130.5200;
214.17 8130.5600, subpart 3; 8130.5800, subpart 5; 8130.7300, subpart
214.18 5; and 8130.8800, subpart 4, are repealed.
214.19 [EFFECTIVE DATE.] This section is effective the day
214.20 following final enactment.
214.21 ARTICLE 12
214.22 SPECIAL TAXES TECHNICAL
214.23 Section 1. Minnesota Statutes 2002, section 287.04, is
214.24 amended to read:
214.25 287.04 [EXEMPTIONS.]
214.26 The tax imposed by section 287.035 does not apply to:
214.27 (a) A decree of marriage dissolution or an instrument made
214.28 pursuant to it.
214.29 (b) A mortgage given to correct a misdescription of the
214.30 mortgaged property.
214.31 (c) A mortgage or other instrument that adds additional
214.32 security for the same debt for which mortgage registry tax has
214.33 been paid.
214.34 (d) A contract for the conveyance of any interest in real
214.35 property, including a contract for deed.
214.36 (e) A mortgage secured by real property subject to the
215.1 minerals production tax of sections 298.24 to 298.28.
215.2 (f) The principal amount of a mortgage loan made under a
215.3 low and moderate income or other affordable housing program, if
215.4 the mortgagee is a federal, state, or local government agency.
215.5 (g) Mortgages granted by fraternal benefit societies
215.6 subject to section 64B.24.
215.7 (h) A mortgage amendment or extension, as defined in
215.8 section 287.01.
215.9 (i) An agricultural mortgage if the proceeds of the loan
215.10 secured by the mortgage are used to acquire or improve real
215.11 property classified under section 273.13, subdivision 23,
215.12 paragraph (a), or (b), clause (1), (2), or (3).
215.13 (j) A mortgage on an armory building as set forth in
215.14 section 193.147.
215.15 [EFFECTIVE DATE.] This section is effective the day
215.16 following final enactment.
215.17 Sec. 2. Minnesota Statutes 2002, section 295.50,
215.18 subdivision 4, is amended to read:
215.19 Subd. 4. [HEALTH CARE PROVIDER.] (a) "Health care
215.20 provider" means:
215.21 (1) a person whose health care occupation is regulated or
215.22 required to be regulated by the state of Minnesota furnishing
215.23 any or all of the following goods or services directly to a
215.24 patient or consumer: medical, surgical, optical, visual,
215.25 dental, hearing, nursing services, drugs, laboratory, diagnostic
215.26 or therapeutic services;
215.27 (2) a person who provides goods and services not listed in
215.28 clause (1) that qualify for reimbursement under the medical
215.29 assistance program provided under chapter 256B;
215.30 (3) a staff model health plan company;
215.31 (4) an ambulance service required to be licensed; or
215.32 (5) a person who sells or repairs hearing aids and related
215.33 equipment or prescription eyewear.
215.34 (b) Health care provider does not include:
215.35 (1) hospitals; medical supplies distributors, except as
215.36 specified under paragraph (a), clause (5); nursing homes
216.1 licensed under chapter 144A or licensed in any other
216.2 jurisdiction; pharmacies; surgical centers; bus and taxicab
216.3 transportation, or any other providers of transportation
216.4 services other than ambulance services required to be licensed;
216.5 supervised living facilities for persons with mental retardation
216.6 or related conditions, licensed under Minnesota Rules, parts
216.7 4665.0100 to 4665.9900; residential care homes licensed under
216.8 chapter 144B housing with services establishments required to be
216.9 registered under chapter 144D; board and lodging establishments
216.10 providing only custodial services that are licensed under
216.11 chapter 157 and registered under section 157.17 to provide
216.12 supportive services or health supervision services; adult foster
216.13 homes as defined in Minnesota Rules, part 9555.5105; day
216.14 training and habilitation services for adults with mental
216.15 retardation and related conditions as defined in section 252.41,
216.16 subdivision 3; boarding care homes, as defined in Minnesota
216.17 Rules, part 4655.0100; and adult day care centers as defined in
216.18 Minnesota Rules, part 9555.9600;
216.19 (2) home health agencies as defined in Minnesota Rules,
216.20 part 9505.0175, subpart 15; a person providing personal care
216.21 services and supervision of personal care services as defined in
216.22 Minnesota Rules, part 9505.0335; a person providing private duty
216.23 nursing services as defined in Minnesota Rules, part 9505.0360;
216.24 and home care providers required to be licensed under chapter
216.25 144A;
216.26 (3) a person who employs health care providers solely for
216.27 the purpose of providing patient services to its employees; and
216.28 (4) an educational institution that employs health care
216.29 providers solely for the purpose of providing patient services
216.30 to its students if the institution does not receive fee for
216.31 service payments or payments for extended coverage.
216.32 [EFFECTIVE DATE.] This section is effective the day
216.33 following final enactment.
216.34 Sec. 3. Minnesota Statutes 2002, section 296A.22, is
216.35 amended by adding a subdivision to read:
216.36 Subd. 9. [ABATEMENT OF PENALTY.] (a) The commissioner may
217.1 by written order abate any penalty imposed under this section,
217.2 if in the commissioner's opinion there is reasonable cause to do
217.3 so.
217.4 (b) A request for abatement of penalty must be filed with
217.5 the commissioner within 60 days of the date the notice stating
217.6 that a penalty has been imposed was mailed to the taxpayer's
217.7 last known address.
217.8 (c) If the commissioner issues an order denying a request
217.9 for abatement of penalty, the taxpayer may file an
217.10 administrative appeal as provided in section 296A.25 or appeal
217.11 to tax court as provided in section 271.06. If the commissioner
217.12 does not issue an order on the abatement request within 60 days
217.13 from the date the request is received, the taxpayer may appeal
217.14 to tax court as provided in section 271.06.
217.15 [EFFECTIVE DATE.] This section is effective for penalties
217.16 imposed on or after the day following final enactment.
217.17 Sec. 4. Minnesota Statutes 2002, section 297E.01,
217.18 subdivision 5, is amended to read:
217.19 Subd. 5. [DISTRIBUTOR.] "Distributor" means a distributor
217.20 as defined in section 349.12, subdivision 11, or a person or
217.21 linked bingo game provider who markets, sells, or provides
217.22 gambling product to a person or entity for resale or use at the
217.23 retail level.
217.24 [EFFECTIVE DATE.] This section is effective the day
217.25 following final enactment.
217.26 Sec. 5. Minnesota Statutes 2002, section 297E.01,
217.27 subdivision 7, is amended to read:
217.28 Subd. 7. [GAMBLING PRODUCT.] "Gambling product" means
217.29 bingo hard cards, bingo paper, or sheets, or linked bingo paper
217.30 sheets; pull-tabs; tipboards; paddletickets and paddleticket
217.31 cards; raffle tickets; or any other ticket, card, board,
217.32 placard, device, or token that represents a chance, for which
217.33 consideration is paid, to win a prize.
217.34 [EFFECTIVE DATE.] This section is effective the day
217.35 following final enactment.
217.36 Sec. 6. Minnesota Statutes 2002, section 297E.01, is
218.1 amended by adding a subdivision to read:
218.2 Subd. 9a. [LINKED BINGO GAME.] "Linked bingo game" means a
218.3 bingo game played at two or more locations where licensed
218.4 organizations are authorized to conduct bingo, when there is a
218.5 common prize pool and a common selection of numbers or symbols
218.6 conducted at one location, and when the results of the selection
218.7 are transmitted to all participating locations by satellite,
218.8 telephone, or other means by a linked bingo game provider.
218.9 [EFFECTIVE DATE.] This section is effective the day
218.10 following final enactment.
218.11 Sec. 7. Minnesota Statutes 2002, section 297E.01, is
218.12 amended by adding a subdivision to read:
218.13 Subd. 9b. [LINKED BINGO GAME PROVIDER.] "Linked bingo game
218.14 provider" means any person who provides the means to link bingo
218.15 prizes in a linked bingo game, who provides linked bingo paper
218.16 sheets to the participating organizations, who provides linked
218.17 bingo prize management, and who provides the linked bingo game
218.18 system.
218.19 [EFFECTIVE DATE.] This section is effective the day
218.20 following final enactment.
218.21 Sec. 8. Minnesota Statutes 2002, section 297E.07, is
218.22 amended to read:
218.23 297E.07 [INSPECTION RIGHTS.]
218.24 At any reasonable time, without notice and without a search
218.25 warrant, the commissioner may enter a place of business of a
218.26 manufacturer, distributor, or organization, or linked bingo game
218.27 provider; any site from which pull-tabs or tipboards or other
218.28 gambling equipment or gambling product are being manufactured,
218.29 stored, or sold; or any site at which lawful gambling is being
218.30 conducted, and inspect the premises, books, records, and other
218.31 documents required to be kept under this chapter to determine
218.32 whether or not this chapter is being fully complied with. If
218.33 the commissioner is denied free access to or is hindered or
218.34 interfered with in making an inspection of the place of
218.35 business, books, or records, the permit of the distributor may
218.36 be revoked by the commissioner, and the license of the
219.1 manufacturer, the distributor, or the organization, or linked
219.2 bingo game provider may be revoked by the board.
219.3 [EFFECTIVE DATE.] This section is effective the day
219.4 following final enactment.
219.5 Sec. 9. Minnesota Statutes 2003 Supplement, section
219.6 297F.08, subdivision 12, is amended to read:
219.7 Subd. 12. [CIGARETTES IN INTERSTATE COMMERCE.] (a) A
219.8 person may not transport or cause to be transported from this
219.9 state cigarettes for sale in another state without first
219.10 affixing to the cigarettes the stamp required by the state in
219.11 which the cigarettes are to be sold or paying any other excise
219.12 tax on the cigarettes imposed by the state in which the
219.13 cigarettes are to be sold.
219.14 (b) A person may not affix to cigarettes the stamp required
219.15 by another state or pay any other excise tax on the cigarettes
219.16 imposed by another state if the other state prohibits stamps
219.17 from being affixed to the cigarettes, prohibits the payment of
219.18 any other excise tax on the cigarettes, or prohibits the sale of
219.19 the cigarettes.
219.20 (c) Not later than 15 days after the end of each calendar
219.21 quarter, a person who transports or causes to be transported
219.22 from this state cigarettes for sale in another state shall
219.23 submit to the commissioner a report identifying the quantity and
219.24 style of each brand of the cigarettes transported or caused to
219.25 be transported in the preceding calendar quarter, and the name
219.26 and address of each recipient of the cigarettes. This reporting
219.27 requirement only relates to cigarettes manufactured by companies
219.28 that are not original or subsequent participating manufacturers
219.29 in the Master Settlement Agreement with other states.
219.30 (d) For purposes of this section, "person" has the meaning
219.31 given in section 297F.01, subdivision 12. Person does not
219.32 include any common or contract carrier, or public warehouse that
219.33 is not owned, in whole or in part, directly or indirectly by
219.34 such person, and does not include a manufacturer that has
219.35 entered into is an original or subsequent participating
219.36 manufacturer in the Master Settlement Agreement with other
220.1 states.
220.2 [EFFECTIVE DATE.] This section is effective the day
220.3 following final enactment.
220.4 Sec. 10. Minnesota Statutes 2003 Supplement, section
220.5 297F.09, subdivision 1, is amended to read:
220.6 Subdivision 1. [MONTHLY RETURN; CIGARETTE DISTRIBUTOR.] On
220.7 or before the 18th day of each calendar month, a distributor
220.8 with a place of business in this state shall file a return with
220.9 the commissioner showing the quantity of cigarettes manufactured
220.10 or brought in from outside the state or purchased during the
220.11 preceding calendar month and the quantity of cigarettes sold or
220.12 otherwise disposed of in this state and outside this state
220.13 during that month. A licensed distributor outside this state
220.14 shall in like manner file a return showing the quantity of
220.15 cigarettes shipped or transported into this state during the
220.16 preceding calendar month. Returns must be made in the form and
220.17 manner prescribed by the commissioner and must contain any other
220.18 information required by the commissioner. The return must be
220.19 accompanied by a remittance for the full unpaid tax liability
220.20 shown by it. The return for the May liability and 85 percent of
220.21 the estimated June liability is due on the date payment of the
220.22 tax is due. For distributors subject to the accelerated tax
220.23 payment requirements in subdivision 10, the return for the May
220.24 liability is due two business days before June 30th of the year
220.25 and the return for the June liability is due on or before August
220.26 18th of the year.
220.27 [EFFECTIVE DATE.] This section is effective the day
220.28 following final enactment.
220.29 Sec. 11. Minnesota Statutes 2003 Supplement, section
220.30 297F.09, subdivision 2, is amended to read:
220.31 Subd. 2. [MONTHLY RETURN; TOBACCO PRODUCTS DISTRIBUTOR.]
220.32 On or before the 18th day of each calendar month, a distributor
220.33 with a place of business in this state shall file a return with
220.34 the commissioner showing the quantity and wholesale sales price
220.35 of each tobacco product:
220.36 (1) brought, or caused to be brought, into this state for
221.1 sale; and
221.2 (2) made, manufactured, or fabricated in this state for
221.3 sale in this state, during the preceding calendar month.
221.4 Every licensed distributor outside this state shall in like
221.5 manner file a return showing the quantity and wholesale sales
221.6 price of each tobacco product shipped or transported to
221.7 retailers in this state to be sold by those retailers, during
221.8 the preceding calendar month. Returns must be made in the form
221.9 and manner prescribed by the commissioner and must contain any
221.10 other information required by the commissioner. The return must
221.11 be accompanied by a remittance for the full tax liability
221.12 shown. The return for the May liability and 85 percent of the
221.13 estimated June liability is due on the date payment of the tax
221.14 is due. For distributors subject to the accelerated tax payment
221.15 requirements in subdivision 10, the return for the May liability
221.16 is due two business days before June 30th of the year and the
221.17 return for the June liability is due on or before August 18th of
221.18 the year.
221.19 [EFFECTIVE DATE.] This section is effective the day
221.20 following final enactment.
221.21 Sec. 12. Minnesota Statutes 2002, section 297I.01, is
221.22 amended by adding a subdivision to read:
221.23 Subd. 13a. [REINSURANCE.] "Reinsurance" is insurance
221.24 whereby an insurance company, for a consideration, agrees to
221.25 indemnify another insurance company against all or part of the
221.26 loss which the latter may sustain under the policy or policies
221.27 which it has issued.
221.28 [EFFECTIVE DATE.] This section is effective the day
221.29 following final enactment.
221.30 Sec. 13. Minnesota Statutes 2002, section 297I.05,
221.31 subdivision 4, is amended to read:
221.32 Subd. 4. [MUTUAL PROPERTY AND CASUALTY COMPANIES WITH
221.33 TOTAL ASSETS LESS THAN $1,600,000,000 ON DECEMBER 31, 1989.] A
221.34 tax is imposed on mutual property and casualty companies that
221.35 had total assets greater than $5,000,000 at the end of the
221.36 calendar year but that had total assets less than $1,600,000,000
222.1 on December 31, 1989. The rate of tax is equal to:
222.2 (1) two percent of gross premiums less return premiums on
222.3 all direct business received by the insurer or agents of the
222.4 insurer in Minnesota for life insurance, in cash or otherwise,
222.5 during the year; and
222.6 (2) 1.26 percent of gross premiums less return premiums on
222.7 all other direct business received by the insurer or agents of
222.8 the insurer in Minnesota, in cash or otherwise, during the year.
222.9 [EFFECTIVE DATE.] This section is effective for returns,
222.10 taxes, surcharges, and estimated payments required to be filed
222.11 or paid for tax years beginning on or after January 1, 2004.
222.12 Sec. 14. Minnesota Statutes 2002, section 297I.05,
222.13 subdivision 5, is amended to read:
222.14 Subd. 5. [HEALTH MAINTENANCE ORGANIZATIONS, NONPROFIT
222.15 HEALTH SERVICE PLAN CORPORATIONS, AND COMMUNITY INTEGRATED
222.16 SERVICE NETWORKS.] (a) Health maintenance organizations,
222.17 community integrated service networks, and nonprofit health care
222.18 service plan corporations are exempt from the tax imposed under
222.19 this section for premiums received in calendar years 2001 to
222.20 2003.
222.21 (b) For calendar years after 2003, A tax is imposed on
222.22 health maintenance organizations, community integrated service
222.23 networks, and nonprofit health care service plan corporations.
222.24 The rate of tax is equal to one percent of gross premiums less
222.25 return premiums on all direct business received by the
222.26 organization, network, or corporation or its agents in
222.27 Minnesota, in cash or otherwise, in the calendar year.
222.28 (c) In approving the premium rates as required in sections
222.29 62L.08, subdivision 8, and 62A.65, subdivision 3, the
222.30 commissioners of health and commerce shall ensure that any
222.31 exemption from tax as described in paragraph (a) is reflected in
222.32 the premium rate.
222.33 (d) (b) The commissioner shall deposit all revenues,
222.34 including penalties and interest, collected under this chapter
222.35 from health maintenance organizations, community integrated
222.36 service networks, and nonprofit health service plan corporations
223.1 in the health care access fund. Refunds of overpayments of tax
223.2 imposed by this subdivision must be paid from the health care
223.3 access fund. There is annually appropriated from the health
223.4 care access fund to the commissioner the amount necessary to
223.5 make any refunds of the tax imposed under this subdivision.
223.6 [EFFECTIVE DATE.] This section is effective January 1, 2004.
223.7 Sec. 15. [REPEALER.]
223.8 Minnesota Statutes 2002, section 297E.12, subdivision 10,
223.9 is repealed effective the day following final enactment.
223.10 ARTICLE 13
223.11 MISCELLANEOUS TECHNICAL
223.12 Section 1. Minnesota Statutes 2002, section 270.65, is
223.13 amended to read:
223.14 270.65 [DATE OF ASSESSMENT; DEFINITION.]
223.15 For purposes of taxes administered by the commissioner, the
223.16 term "date of assessment" means the date a liability reported on
223.17 a return was entered into the records of the commissioner or the
223.18 date a return should have been filed, whichever is later; or, in
223.19 the case of taxes determined by the commissioner, "date of
223.20 assessment" means the date of the order assessing taxes or date
223.21 of the return made by the commissioner; or, in the case of an
223.22 amended return filed by the taxpayer, the assessment date is the
223.23 date additional liability reported on the return, if any, was
223.24 entered into the records of the commissioner; or, in the case of
223.25 a consent agreement signed by the taxpayer under section 270.67,
223.26 subdivision 3, the assessment date is the notice date shown on
223.27 the agreement; or, in the case of a check from a taxpayer that
223.28 is dishonored and results in an erroneous refund being given to
223.29 the taxpayer, remittance of the check is deemed to be an
223.30 assessment and the "date of assessment" is the date the check
223.31 was received by the commissioner.
223.32 [EFFECTIVE DATE.] This section is effective the day
223.33 following final enactment.
223.34 Sec. 2. Minnesota Statutes 2003 Supplement, section
223.35 289A.19, subdivision 4, is amended to read:
223.36 Subd. 4. [ESTATE TAX RETURNS.] When in the commissioner's
224.1 judgment good cause exists, the commissioner may extend the time
224.2 for filing an estate tax return for not more than six months.
224.3 When an extension to file the federal estate tax return has been
224.4 granted under section 6081 of the Internal Revenue Code, the
224.5 time for filing the estate tax return is extended for that
224.6 period. If the estate requests an extension to file an estate
224.7 tax return within the time provided in section 289A.18,
224.8 subdivision 3, the commissioner shall extend the time for filing
224.9 the estate tax return for six months.
224.10 [EFFECTIVE DATE.] This section is effective for estates of
224.11 decedents dying after December 31, 2003.
224.12 Sec. 3. Minnesota Statutes 2002, section 289A.37,
224.13 subdivision 5, is amended to read:
224.14 Subd. 5. [SUFFICIENCY OF NOTICE.] An order of assessment,
224.15 sent postage prepaid by United States mail to the taxpayer at
224.16 the taxpayer's last known address, or sent by electronic mail to
224.17 the taxpayer's last known electronic mailing address as provided
224.18 for in section 325L.08, is sufficient even if the taxpayer is
224.19 deceased or is under a legal disability, or, in the case of a
224.20 corporation, has terminated its existence, unless the department
224.21 has been provided with a new address by a party authorized to
224.22 receive notices of assessment.
224.23 [EFFECTIVE DATE.] This section is effective the day
224.24 following final enactment.
224.25 Sec. 4. Minnesota Statutes 2002, section 289A.60,
224.26 subdivision 6, is amended to read:
224.27 Subd. 6. [PENALTY FOR FAILURE TO FILE, FALSE OR FRAUDULENT
224.28 RETURN, EVASION.] If a person, with intent to evade or defeat a
224.29 tax or payment of tax, fails to file a return, files a false or
224.30 fraudulent return, or attempts in any other manner to evade or
224.31 defeat a tax or payment of tax, there is imposed on the person a
224.32 penalty equal to 50 percent of the tax, less amounts paid by the
224.33 person on the basis of the false or fraudulent return, if any,
224.34 due for the period to which the return related.
224.35 [EFFECTIVE DATE.] This section is effective the day
224.36 following final enactment.
225.1 Sec. 5. Minnesota Statutes 2003 Supplement, section
225.2 290.01, subdivision 19a, is amended to read:
225.3 Subd. 19a. [ADDITIONS TO FEDERAL TAXABLE INCOME.] For
225.4 individuals, estates, and trusts, there shall be added to
225.5 federal taxable income:
225.6 (1)(i) interest income on obligations of any state other
225.7 than Minnesota or a political or governmental subdivision,
225.8 municipality, or governmental agency or instrumentality of any
225.9 state other than Minnesota exempt from federal income taxes
225.10 under the Internal Revenue Code or any other federal statute;
225.11 and
225.12 (ii) exempt-interest dividends as defined in section
225.13 852(b)(5) of the Internal Revenue Code, except the portion of
225.14 the exempt-interest dividends derived from interest income on
225.15 obligations of the state of Minnesota or its political or
225.16 governmental subdivisions, municipalities, governmental agencies
225.17 or instrumentalities, but only if the portion of the
225.18 exempt-interest dividends from such Minnesota sources paid to
225.19 all shareholders represents 95 percent or more of the
225.20 exempt-interest dividends that are paid by the regulated
225.21 investment company as defined in section 851(a) of the Internal
225.22 Revenue Code, or the fund of the regulated investment company as
225.23 defined in section 851(g) of the Internal Revenue Code, making
225.24 the payment; and
225.25 (iii) for the purposes of items (i) and (ii), interest on
225.26 obligations of an Indian tribal government described in section
225.27 7871(c) of the Internal Revenue Code shall be treated as
225.28 interest income on obligations of the state in which the tribe
225.29 is located;
225.30 (2) the amount of income taxes paid or accrued within the
225.31 taxable year under this chapter and income the amount of taxes
225.32 based on net income paid to any other state or to any province
225.33 or territory of Canada, to the extent allowed as a deduction
225.34 under section 63(d) of the Internal Revenue Code, but the
225.35 addition may not be more than the amount by which the itemized
225.36 deductions as allowed under section 63(d) of the Internal
226.1 Revenue Code exceeds the amount of the standard deduction as
226.2 defined in section 63(c) of the Internal Revenue Code. For the
226.3 purpose of this paragraph, the disallowance of itemized
226.4 deductions under section 68 of the Internal Revenue Code of
226.5 1986, income tax is the last itemized deduction disallowed;
226.6 (3) the capital gain amount of a lump sum distribution to
226.7 which the special tax under section 1122(h)(3)(B)(ii) of the Tax
226.8 Reform Act of 1986, Public Law 99-514, applies;
226.9 (4) the amount of income taxes paid or accrued within the
226.10 taxable year under this chapter and income taxes based on net
226.11 income paid to any other state or any province or territory of
226.12 Canada, to the extent allowed as a deduction in determining
226.13 federal adjusted gross income. For the purpose of this
226.14 paragraph, income taxes do not include the taxes imposed by
226.15 sections 290.0922, subdivision 1, paragraph (b), 290.9727,
226.16 290.9728, and 290.9729;
226.17 (5) the amount of expense, interest, or taxes disallowed
226.18 pursuant to section 290.10;
226.19 (6) the amount of a partner's pro rata share of net income
226.20 which does not flow through to the partner because the
226.21 partnership elected to pay the tax on the income under section
226.22 6242(a)(2) of the Internal Revenue Code; and
226.23 (7) 80 percent of the depreciation deduction allowed under
226.24 section 168(k) of the Internal Revenue Code. For purposes of
226.25 this clause, if the taxpayer has an activity that in the taxable
226.26 year generates a deduction for depreciation under section 168(k)
226.27 and the activity generates a loss for the taxable year that the
226.28 taxpayer is not allowed to claim for the taxable year, "the
226.29 depreciation allowed under section 168(k)" for the taxable year
226.30 is limited to excess of the depreciation claimed by the activity
226.31 under section 168(k) over the amount of the loss from the
226.32 activity that is not allowed in the taxable year. In succeeding
226.33 taxable years when the losses not allowed in the taxable year
226.34 are allowed, the depreciation under section 168(k) is allowed.
226.35 [EFFECTIVE DATE.] This section is effective for tax years
226.36 beginning after December 31, 2003.
227.1 Sec. 6. Minnesota Statutes 2002, section 290.06,
227.2 subdivision 22, is amended to read:
227.3 Subd. 22. [CREDIT FOR TAXES PAID TO ANOTHER STATE.] (a) A
227.4 taxpayer who is liable for taxes based on or measured by net
227.5 income to another state, as provided in paragraphs (b) through
227.6 (f), upon income allocated or apportioned to Minnesota, is
227.7 entitled to a credit for the tax paid to another state if the
227.8 tax is actually paid in the taxable year or a subsequent taxable
227.9 year. A taxpayer who is a resident of this state pursuant to
227.10 section 290.01, subdivision 7, clause (2) paragraph (b), and who
227.11 is subject to income tax as a resident in the state of the
227.12 individual's domicile is not allowed this credit unless the
227.13 state of domicile does not allow a similar credit.
227.14 (b) For an individual, estate, or trust, the credit is
227.15 determined by multiplying the tax payable under this chapter by
227.16 the ratio derived by dividing the income subject to tax in the
227.17 other state that is also subject to tax in Minnesota while a
227.18 resident of Minnesota by the taxpayer's federal adjusted gross
227.19 income, as defined in section 62 of the Internal Revenue Code,
227.20 modified by the addition required by section 290.01, subdivision
227.21 19a, clause (1), and the subtraction allowed by section 290.01,
227.22 subdivision 19b, clause (1), to the extent the income is
227.23 allocated or assigned to Minnesota under sections 290.081 and
227.24 290.17.
227.25 (c) If the taxpayer is an athletic team that apportions all
227.26 of its income under section 290.17, subdivision 5, the credit is
227.27 determined by multiplying the tax payable under this chapter by
227.28 the ratio derived from dividing the total net income subject to
227.29 tax in the other state by the taxpayer's Minnesota taxable
227.30 income.
227.31 (d) The credit determined under paragraph (b) or (c) shall
227.32 not exceed the amount of tax so paid to the other state on the
227.33 gross income earned within the other state subject to tax under
227.34 this chapter, nor shall the allowance of the credit reduce the
227.35 taxes paid under this chapter to an amount less than what would
227.36 be assessed if such income amount was excluded from taxable net
228.1 income.
228.2 (e) In the case of the tax assessed on a lump sum
228.3 distribution under section 290.032, the credit allowed under
228.4 paragraph (a) is the tax assessed by the other state on the lump
228.5 sum distribution that is also subject to tax under section
228.6 290.032, and shall not exceed the tax assessed under section
228.7 290.032. To the extent the total lump sum distribution defined
228.8 in section 290.032, subdivision 1, includes lump sum
228.9 distributions received in prior years or is all or in part an
228.10 annuity contract, the reduction to the tax on the lump sum
228.11 distribution allowed under section 290.032, subdivision 2,
228.12 includes tax paid to another state that is properly apportioned
228.13 to that distribution.
228.14 (f) If a Minnesota resident reported an item of income to
228.15 Minnesota and is assessed tax in such other state on that same
228.16 income after the Minnesota statute of limitations has expired,
228.17 the taxpayer shall receive a credit for that year under
228.18 paragraph (a), notwithstanding any statute of limitations to the
228.19 contrary. The claim for the credit must be submitted within one
228.20 year from the date the taxes were paid to the other state. The
228.21 taxpayer must submit sufficient proof to show entitlement to a
228.22 credit.
228.23 (g) For the purposes of this subdivision, a resident
228.24 shareholder of a corporation treated as an "S" corporation under
228.25 section 290.9725, must be considered to have paid a tax imposed
228.26 on the shareholder in an amount equal to the shareholder's pro
228.27 rata share of any net income tax paid by the S corporation to
228.28 another state. For the purposes of the preceding sentence, the
228.29 term "net income tax" means any tax imposed on or measured by a
228.30 corporation's net income.
228.31 (h) For the purposes of this subdivision, a resident
228.32 partner of an entity taxed as a partnership under the Internal
228.33 Revenue Code must be considered to have paid a tax imposed on
228.34 the partner in an amount equal to the partner's pro rata share
228.35 of any net income tax paid by the partnership to another state.
228.36 For purposes of the preceding sentence, the term "net income"
229.1 tax means any tax imposed on or measured by a partnership's net
229.2 income.
229.3 (i) For the purposes of this subdivision, "another state":
229.4 (1) includes:
229.5 (i) the District of Columbia; and
229.6 (ii) a province or territory of Canada; but
229.7 (2) excludes Puerto Rico and the several territories
229.8 organized by Congress.
229.9 (j) The limitations on the credit in paragraphs (b), (c),
229.10 and (d), are imposed on a state by state basis.
229.11 (k) For a tax imposed by a province or territory of Canada,
229.12 the tax for purposes of this subdivision is the excess of the
229.13 tax over the amount of the foreign tax credit allowed under
229.14 section 27 of the Internal Revenue Code. In determining the
229.15 amount of the foreign tax credit allowed, the net income taxes
229.16 imposed by Canada on the income are deducted first. Any
229.17 remaining amount of the allowable foreign tax credit reduces the
229.18 provincial or territorial tax that qualifies for the credit
229.19 under this subdivision.
229.20 [EFFECTIVE DATE.] This section is effective for tax years
229.21 beginning after December 31, 2003.
229.22 Sec. 7. Minnesota Statutes 2003 Supplement, section
229.23 290.0674, subdivision 1, is amended to read:
229.24 Subdivision 1. [CREDIT ALLOWED.] An individual is allowed
229.25 a credit against the tax imposed by this chapter in an amount
229.26 equal to 75 percent of the amount paid for education-related
229.27 expenses for a qualifying child in kindergarten through grade
229.28 12. For purposes of this section, "education-related expenses"
229.29 means:
229.30 (1) fees or tuition for instruction by an instructor under
229.31 section 120A.22, subdivision 10, clause (1), (2), (3), (4), or
229.32 (5), or a member of the Minnesota Music Teachers Association,
229.33 and who is not a lineal ancestor or sibling of the dependent for
229.34 instruction outside the regular school day or school year,
229.35 including tutoring, driver's education offered as part of school
229.36 curriculum, regardless of whether it is taken from a public or
230.1 private entity or summer camps, in grade or age appropriate
230.2 curricula that supplement curricula and instruction available
230.3 during the regular school year, that assists a dependent to
230.4 improve knowledge of core curriculum areas or to expand
230.5 knowledge and skills under the graduation rule under section
230.6 120B.02, paragraph (e), clauses (1) to (7), (9), and (10)
230.7 required academic standards under section 120B.021, subdivision
230.8 1, and the elective standard under section 120B.022, subdivision
230.9 1, clause (3), and that do not include the teaching of religious
230.10 tenets, doctrines, or worship, the purpose of which is to
230.11 instill such tenets, doctrines, or worship;
230.12 (2) expenses for textbooks, including books and other
230.13 instructional materials and equipment purchased or leased for
230.14 use in elementary and secondary schools in teaching only those
230.15 subjects legally and commonly taught in public elementary and
230.16 secondary schools in this state. "Textbooks" does not include
230.17 instructional books and materials used in the teaching of
230.18 religious tenets, doctrines, or worship, the purpose of which is
230.19 to instill such tenets, doctrines, or worship, nor does it
230.20 include books or materials for extracurricular activities
230.21 including sporting events, musical or dramatic events, speech
230.22 activities, driver's education, or similar programs;
230.23 (3) a maximum expense of $200 per family for personal
230.24 computer hardware, excluding single purpose processors, and
230.25 educational software that assists a dependent to improve
230.26 knowledge of core curriculum areas or to expand knowledge and
230.27 skills under the graduation rule under section 120B.02 required
230.28 academic standards under section 120B.021, subdivision 1, and
230.29 the elective standard under section 120B.022, subdivision 1,
230.30 clause (3), purchased for use in the taxpayer's home and not
230.31 used in a trade or business regardless of whether the computer
230.32 is required by the dependent's school; and
230.33 (4) the amount paid to others for transportation of a
230.34 qualifying child attending an elementary or secondary school
230.35 situated in Minnesota, North Dakota, South Dakota, Iowa, or
230.36 Wisconsin, wherein a resident of this state may legally fulfill
231.1 the state's compulsory attendance laws, which is not operated
231.2 for profit, and which adheres to the provisions of the Civil
231.3 Rights Act of 1964 and chapter 363A.
231.4 For purposes of this section, "qualifying child" has the
231.5 meaning given in section 32(c)(3) of the Internal Revenue Code.
231.6 [EFFECTIVE DATE.] This section is effective for tax years
231.7 beginning after December 31, 2003.
231.8 Sec. 8. Minnesota Statutes 2002, section 290.92,
231.9 subdivision 1, is amended to read:
231.10 Subdivision 1. [DEFINITIONS.] (1) [WAGES.] For purposes
231.11 of this section, the term "wages" means the same as that term is
231.12 defined in section 3401(a) and (f) of the Internal Revenue Code.
231.13 (2) [PAYROLL PERIOD.] For purposes of this section the
231.14 term "payroll period" means a period for which a payment of
231.15 wages is ordinarily made to the employee by the employee's
231.16 employer, and the term "miscellaneous payroll period" means a
231.17 payroll period other than a daily, weekly, biweekly,
231.18 semimonthly, monthly, quarterly, semiannual, or annual payroll
231.19 period.
231.20 (3) [EMPLOYEE.] For purposes of this section the term
231.21 "employee" means any resident individual performing services for
231.22 an employer, either within or without, or both within and
231.23 without the state of Minnesota, and every nonresident individual
231.24 performing services within the state of Minnesota, the
231.25 performance of which services constitute, establish, and
231.26 determine the relationship between the parties as that of
231.27 employer and employee. As used in the preceding sentence, the
231.28 term "employee" includes an officer of a corporation, and an
231.29 officer, employee, or elected official of the United States, a
231.30 state, or any political subdivision thereof, or the District of
231.31 Columbia, or any agency or instrumentality of any one or more of
231.32 the foregoing.
231.33 (4) [EMPLOYER.] For purposes of this section the term
231.34 "employer" means any person, including individuals, fiduciaries,
231.35 estates, trusts, partnerships, limited liability companies, and
231.36 corporations transacting business in or deriving any income from
232.1 sources within the state of Minnesota for whom an individual
232.2 performs or performed any service, of whatever nature, as the
232.3 employee of such person, except that if the person for whom the
232.4 individual performs or performed the services does not have
232.5 legal control of the payment of the wages for such services, the
232.6 term "employer," except for purposes of paragraph (1), means the
232.7 person having legal control of the payment of such wages. As
232.8 used in the preceding sentence, the term "employer" includes any
232.9 corporation, individual, estate, trust, or organization which is
232.10 exempt from taxation under section 290.05 and further includes,
232.11 but is not limited to, officers of corporations who have legal
232.12 control, either individually or jointly with another or others,
232.13 of the payment of the wages.
232.14 (5) [NUMBER OF WITHHOLDING EXEMPTIONS CLAIMED.] For
232.15 purposes of this section, the term "number of withholding
232.16 exemptions claimed" means the number of withholding exemptions
232.17 claimed in a withholding exemption certificate in effect under
232.18 subdivision 5, except that if no such certificate is in effect,
232.19 the number of withholding exemptions claimed shall be considered
232.20 to be zero.
232.21 [EFFECTIVE DATE.] This section is effective the day
232.22 following final enactment.
232.23 Sec. 9. Minnesota Statutes 2002, section 290C.05, is
232.24 amended to read:
232.25 290C.05 [ANNUAL CERTIFICATION.]
232.26 On or before July 1 of each year, beginning with the year
232.27 after the claimant has received an approved application, the
232.28 commissioner shall send each claimant enrolled under the
232.29 sustainable forest incentive program a certification form. The
232.30 claimant must sign the certification, attesting that the
232.31 requirements and conditions for continued enrollment in the
232.32 program are currently being met, and must return the signed
232.33 certification form to the commissioner by August 15 of that same
232.34 year. Failure to If the claimant does not return an annual
232.35 certification form by the due date shall result in removal of
232.36 the lands from the provisions of the sustainable forest
233.1 incentive program, and the imposition of any applicable removal
233.2 penalty, the provisions in section 290C.11 apply. The claimant
233.3 may appeal the removal and any associated penalty according to
233.4 the procedures and within the time allowed under this chapter.
233.5 [EFFECTIVE DATE.] This section is effective the day
233.6 following final enactment.
233.7 Sec. 10. [290C.055] [LENGTH OF COVENANT.]
233.8 The covenant remains in effect for a minimum of eight
233.9 years. If land is removed from the program after it has been
233.10 enrolled for less than four years, the covenant remains in
233.11 effect for eight years from the date recorded.
233.12 In the case of land that has been enrolled for more than
233.13 four years and is removed from the program for any reason, there
233.14 is a four-year waiting period to end the covenant. The covenant
233.15 remains in effect until January 1 of the fifth calendar year
233.16 that begins after the date that:
233.17 (1) the commissioner receives notification from the
233.18 claimant that the claimant wishes to be removed from the program
233.19 under section 290C.10, or
233.20 (2) the date that land is removed from the program under
233.21 section 290C.11.
233.22 Notwithstanding the other provisions of this section, the
233.23 covenant is terminated at the same time that land is removed
233.24 from the program due to acquisition of title or possession for a
233.25 public purpose under section 290C.10.
233.26 [EFFECTIVE DATE.] This section is effective the day
233.27 following final enactment.
233.28 Sec. 11. Minnesota Statutes 2002, section 325D.33,
233.29 subdivision 6, is amended to read:
233.30 Subd. 6. [VIOLATIONS.] If the commissioner determines that
233.31 a distributor is violating any provision of this chapter, the
233.32 commissioner must give the distributor a written warning
233.33 explaining the violation and an explanation of what must be done
233.34 to comply with this chapter. Within ten days of issuance of the
233.35 warning, the distributor must notify the commissioner that the
233.36 distributor has complied with the commissioner's recommendation
234.1 or request that the commissioner set the issue for a hearing
234.2 pursuant to chapter 14. If a hearing is requested, the hearing
234.3 shall be scheduled within 20 days of the request and the
234.4 recommendation of the administrative law judge shall be issued
234.5 within five working days of the close of the hearing. The
234.6 commissioner's final determination shall be issued within five
234.7 working days of the receipt of the administrative law judge's
234.8 recommendation. If the commissioner's final determination is
234.9 adverse to the distributor and the distributor does not comply
234.10 within ten days of receipt of the commissioner's final
234.11 determination, the commissioner may order the distributor to
234.12 immediately cease the stamping of cigarettes. As soon as
234.13 practicable after the order, the commissioner must remove the
234.14 meter and any unapplied cigarette stamps from the premises of
234.15 the distributor.
234.16 If within ten days of issuance of the written warning the
234.17 distributor has not complied with the commissioner's
234.18 recommendation or requested a hearing, the commissioner may
234.19 order the distributor to immediately cease the stamping of
234.20 cigarettes and remove the meter and unapplied stamps from the
234.21 distributor's premises.
234.22 If, within any 12-month period, the commissioner has issued
234.23 three written warnings to any distributor, even if the
234.24 distributor has complied within ten days, the commissioner shall
234.25 notify the distributor of the commissioner's intent to revoke
234.26 the distributor's license for a continuing course of conduct
234.27 contrary to this chapter. For purposes of this paragraph, a
234.28 written warning that was ultimately resolved by removal of the
234.29 warning by the commissioner is not deemed to be a warning. The
234.30 commissioner must notify the distributor of the date and time of
234.31 a hearing pursuant to chapter 14 at least 20 days before the
234.32 hearing is held. The hearing must provide an opportunity for
234.33 the distributor to show cause why the license should not be
234.34 revoked. If the commissioner revokes a distributor's license,
234.35 the commissioner shall not issue a new license to that
234.36 distributor for 180 days.
235.1 [EFFECTIVE DATE.] This section is effective the day
235.2 following final enactment.
235.3 Sec. 12. Minnesota Statutes 2002, section 473.843,
235.4 subdivision 5, is amended to read:
235.5 Subd. 5. [PENALTIES; ENFORCEMENT.] The audit, penalty, and
235.6 enforcement provisions applicable to corporate franchise taxes
235.7 imposed under chapter 290 apply to the fees imposed under this
235.8 section. The commissioner of revenue shall administer the
235.9 provisions.
235.10 [EFFECTIVE DATE.] This section is effective the day
235.11 following final enactment.
235.12 Sec. 13. [REPEALER.]
235.13 Minnesota Rules, parts 8093.2000 and 8093.3000, are
235.14 repealed.
235.15 [EFFECTIVE DATE.] This section is effective the day
235.16 following final enactment.
235.17 ARTICLE 14
235.18 BLUE WATERS
235.19 Section 1. Minnesota Statutes 2003 Supplement, section
235.20 273.13, subdivision 23, is amended to read:
235.21 Subd. 23. [CLASS 2.] (a) Class 2a property is agricultural
235.22 land including any improvements that is homesteaded. The market
235.23 value of the house and garage and immediately surrounding one
235.24 acre of land has the same class rates as class 1a property under
235.25 subdivision 22. The value of the remaining land including
235.26 improvements up to and including $600,000 market value has a net
235.27 class rate of 0.55 percent of market value. The remaining
235.28 property over $600,000 market value has a class rate of one
235.29 percent of market value.
235.30 (b) Class 2b property is (1) real estate, rural in
235.31 character and used exclusively for growing trees for timber,
235.32 lumber, and wood and wood products; (2) real estate that is not
235.33 improved with a structure and is used exclusively for growing
235.34 trees for timber, lumber, and wood and wood products, if the
235.35 owner has participated or is participating in a cost-sharing
235.36 program for afforestation, reforestation, or timber stand
236.1 improvement on that particular property, administered or
236.2 coordinated by the commissioner of natural resources; (3) real
236.3 estate that is nonhomestead agricultural land; or (4) a landing
236.4 area or public access area of a privately owned public use
236.5 airport. Class 2b property has a net class rate of one percent
236.6 of market value.
236.7 (c) Agricultural land as used in this section means
236.8 contiguous acreage of ten acres or more, used during the
236.9 preceding year for agricultural purposes. "Agricultural
236.10 purposes" as used in this section means the raising or
236.11 cultivation of agricultural products. "Agricultural purposes"
236.12 also includes enrollment in the Reinvest in Minnesota program
236.13 under sections 103F.501 to 103F.535 or the federal Conservation
236.14 Reserve Program as contained in Public Law 99-198 if the
236.15 property was classified as agricultural (i) under this
236.16 subdivision for the assessment year 2002 or (ii) in the year
236.17 prior to its enrollment. Contiguous acreage on the same parcel,
236.18 or contiguous acreage on an immediately adjacent parcel under
236.19 the same ownership, may also qualify as agricultural land, but
236.20 only if it is pasture, timber, waste, unusable wild land, or
236.21 land included in state or federal farm programs. Agricultural
236.22 classification for property shall be determined excluding the
236.23 house, garage, and immediately surrounding one acre of land, and
236.24 shall not be based upon the market value of any residential
236.25 structures on the parcel or contiguous parcels under the same
236.26 ownership.
236.27 (d) Real estate, excluding the house, garage, and
236.28 immediately surrounding one acre of land, of less than ten acres
236.29 which is exclusively and intensively used for raising or
236.30 cultivating agricultural products, shall be considered as
236.31 agricultural land.
236.32 Land shall be classified as agricultural even if all or a
236.33 portion of the agricultural use of that property is the leasing
236.34 to, or use by another person for agricultural purposes.
236.35 Classification under this subdivision is not determinative
236.36 for qualifying under section 273.111.
237.1 The property classification under this section supersedes,
237.2 for property tax purposes only, any locally administered
237.3 agricultural policies or land use restrictions that define
237.4 minimum or maximum farm acreage.
237.5 (e) The term "agricultural products" as used in this
237.6 subdivision includes production for sale of:
237.7 (1) livestock, dairy animals, dairy products, poultry and
237.8 poultry products, fur-bearing animals, horticultural and nursery
237.9 stock, fruit of all kinds, vegetables, forage, grains, bees, and
237.10 apiary products by the owner;
237.11 (2) fish bred for sale and consumption if the fish breeding
237.12 occurs on land zoned for agricultural use;
237.13 (3) the commercial boarding of horses if the boarding is
237.14 done in conjunction with raising or cultivating agricultural
237.15 products as defined in clause (1);
237.16 (4) property which is owned and operated by nonprofit
237.17 organizations used for equestrian activities, excluding racing;
237.18 (5) game birds and waterfowl bred and raised for use on a
237.19 shooting preserve licensed under section 97A.115;
237.20 (6) insects primarily bred to be used as food for animals;
237.21 (7) trees, grown for sale as a crop, and not sold for
237.22 timber, lumber, wood, or wood products; and
237.23 (8) maple syrup taken from trees grown by a person licensed
237.24 by the Minnesota Department of Agriculture under chapter 28A as
237.25 a food processor.
237.26 (f) If a parcel used for agricultural purposes is also used
237.27 for commercial or industrial purposes, including but not limited
237.28 to:
237.29 (1) wholesale and retail sales;
237.30 (2) processing of raw agricultural products or other goods;
237.31 (3) warehousing or storage of processed goods; and
237.32 (4) office facilities for the support of the activities
237.33 enumerated in clauses (1), (2), and (3),
237.34 the assessor shall classify the part of the parcel used for
237.35 agricultural purposes as class 1b, 2a, or 2b, whichever is
237.36 appropriate, and the remainder in the class appropriate to its
238.1 use. The grading, sorting, and packaging of raw agricultural
238.2 products for first sale is considered an agricultural purpose.
238.3 A greenhouse or other building where horticultural or nursery
238.4 products are grown that is also used for the conduct of retail
238.5 sales must be classified as agricultural if it is primarily used
238.6 for the growing of horticultural or nursery products from seed,
238.7 cuttings, or roots and occasionally as a showroom for the retail
238.8 sale of those products. Use of a greenhouse or building only
238.9 for the display of already grown horticultural or nursery
238.10 products does not qualify as an agricultural purpose.
238.11 The assessor shall determine and list separately on the
238.12 records the market value of the homestead dwelling and the one
238.13 acre of land on which that dwelling is located. If any farm
238.14 buildings or structures are located on this homesteaded acre of
238.15 land, their market value shall not be included in this separate
238.16 determination.
238.17 (g) To qualify for classification under paragraph (b),
238.18 clause (4), a privately owned public use airport must be
238.19 licensed as a public airport under section 360.018. For
238.20 purposes of paragraph (b), clause (4), "landing area" means that
238.21 part of a privately owned public use airport properly cleared,
238.22 regularly maintained, and made available to the public for use
238.23 by aircraft and includes runways, taxiways, aprons, and sites
238.24 upon which are situated landing or navigational aids. A landing
238.25 area also includes land underlying both the primary surface and
238.26 the approach surfaces that comply with all of the following:
238.27 (i) the land is properly cleared and regularly maintained
238.28 for the primary purposes of the landing, taking off, and taxiing
238.29 of aircraft; but that portion of the land that contains
238.30 facilities for servicing, repair, or maintenance of aircraft is
238.31 not included as a landing area;
238.32 (ii) the land is part of the airport property; and
238.33 (iii) the land is not used for commercial or residential
238.34 purposes.
238.35 The land contained in a landing area under paragraph (b), clause
238.36 (4), must be described and certified by the commissioner of
239.1 transportation. The certification is effective until it is
239.2 modified, or until the airport or landing area no longer meets
239.3 the requirements of paragraph (b), clause (4). For purposes of
239.4 paragraph (b), clause (4), "public access area" means property
239.5 used as an aircraft parking ramp, apron, or storage hangar, or
239.6 an arrival and departure building in connection with the airport.
239.7 (h) Class 2c property consists of any parcel or contiguous
239.8 parcels of unimproved real estate, excluding agricultural land
239.9 classified under this subdivision, that meets all the criteria
239.10 in clauses (1) to (5):
239.11 (1) the property consists of at least 200 contiguous feet
239.12 of unimproved real estate that borders a meandered lake as
239.13 defined in section 103G.005, subdivision 15, paragraph (a),
239.14 clause (3);
239.15 (2) the unimproved real estate is located within 400 feet
239.16 from the ordinary high water elevation of the public waters.
239.17 For purposes of this clause, "unimproved" means that the
239.18 property, or that portion of the property qualifying under this
239.19 paragraph, contains no structures, that there are no docks or
239.20 landings on its shoreline, and that the natural terrain and
239.21 vegetation has not been disturbed, or has been restored to
239.22 native vegetation;
239.23 (3) the property is either (i) the homestead of the owner,
239.24 the owner's spouse, or the owner or spouse's son or daughter, or
239.25 (ii) has been in possession of the owner, the owner's spouse, or
239.26 the owner's or spouse's son or daughter for a period of at least
239.27 seven years prior to application for benefits under this
239.28 section;
239.29 (4) the owner files an application with the county assessor
239.30 by July 1 for classification under this paragraph for the
239.31 subsequent assessment year; and
239.32 (5) the owner of the property signs a covenant agreement
239.33 and files the covenant with the county assessor in the county
239.34 where the property is located. The covenant agreement must
239.35 include all of the following:
239.36 (i) legal description of the area to which the covenant
240.1 applies;
240.2 (ii) name and address of the owner;
240.3 (iii) a statement that the land described in the covenant
240.4 must be kept as undeveloped land for the duration of the
240.5 covenant;
240.6 (iv) a statement that the landowner may initiate expiration
240.7 of the covenant agreement by notifying the county assessor, in
240.8 writing, with the date of expiration which must be at least
240.9 eight years from the date of the expiration notice;
240.10 (v) a statement that the covenant is binding on the owner
240.11 or owner's successor or assignee and runs with the land; and
240.12 (vi) a witnessed signature of the owner covenanting to keep
240.13 the land in its undeveloped state as it existed on the date the
240.14 covenant was signed.
240.15 Upon expiration of a covenant agreement in clause (5), the
240.16 property is subject to additional taxes. The amount of
240.17 additional taxes due on the property equals the difference
240.18 between the taxes actually levied and the taxes that would have
240.19 been imposed if the property had been valued and classified as
240.20 if class 2c did not apply. The additional taxes must be
240.21 extended against the property on the tax list for the current
240.22 year. No interest or penalties may be levied on the additional
240.23 taxes if timely paid, and the additional taxes must be levied
240.24 only with respect to the last seven years that the property was
240.25 valued and assessed under this paragraph. For purposes of this
240.26 paragraph, "timely paid" means paid (A) within 60 days after
240.27 notification from the county that the property no longer
240.28 qualifies, or (B) prior to the recording of the conveyance of
240.29 the property, whichever is earlier.
240.30 The tax imposed under this paragraph is a lien on the
240.31 property assessed to the same extent and for the same duration
240.32 as other real property taxes. The tax must be extended by the
240.33 county auditor and, when payable, be collected and distributed
240.34 in the same manner provided by law for the collection and
240.35 distribution of other property taxes.
240.36 Class 2c has a class rate of 0.8 percent of market value.
241.1 [EFFECTIVE DATE.] This section is effective for the 2005
241.2 assessment and thereafter, for taxes payable in 2006 and
241.3 thereafter.